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Profitable Companies Often Prefer to Issue Debt Rather Than Preference

Question 87

Multiple Choice

Profitable companies often prefer to issue debt rather than preference shares because [blank].


A) debt creates less risk for the company
B) interest payments are fixed but preferred shareholders expect dividends to grow
C) preference shares dilute the voting rights of common shareholders but bonds do not
D) interest on debt is deductible for tax purposes, but preferred dividends are not

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