Reason corporation might issue bonds rather than sell stock

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Reference no: EM131255291

One reason a corporation might issue bonds rather than sell stock is that:

a. bond interest is a tax-deductible expense.

b. interest rates are high.

c. dividends will lower the amount of tax due.

d. bond holders have claims at liquidation.

For a corporation, bond interest:

a. in treated the same as dividends for tax purposes

b. has no effect on earning and therefore has no effect on income taxes.

c. reduces income tax by reducing earnings.

d. None of the above.

Reference no: EM131255291

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