Bonds are popular source of financing because: a. The bondholders can always convert their bonds into stock if they choose. b. Financial analysts tend to downgrade a company that has raised large amounts of cash by frequent issues of stock. c. A company having cash flow problems can postpone payment of interest to bondholders. d. Bond interest expense is deductible for tax purposes, while dividends paid on stock are not.

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Business

Aries

7 October, 03:07

Bonds are popular source of financing because: a. The bondholders can always convert their bonds into stock if they choose. b. Financial analysts tend to downgrade a company that has raised large amounts of cash by frequent issues of stock. c. A company having cash flow problems can postpone payment of interest to bondholders. d. Bond interest expense is deductible for tax purposes, while dividends paid on stock are not.

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Myla Moran · Answer 1

The correct answer is d. Bond interest expense is deductible for tax purposes, while dividends paid on stock are not.

Explanation:

Any bond interest that a company pays is tax-deductible.