A tax loopholes encourages corporations that are lightly taxed or not taxable due to losses or tax shelters to issue Blank______. Multiple choice question. retractable bonds convertible bonds floating-rate bonds preferred stock
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A tax loopholes encourages corporations that are lightly taxed or not taxable due to losses or tax shelters to issue Blank______.
retractable bonds
convertible bonds
floating-rate bonds
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- Identify the following as either an advantage (A) or a disadvantage (D) of bond financing for a company. Interest on bonds is tax deductible.One reason a company may choose to issue additional debt instead of equity when raising capital is that __________.debt interest payments are tax-deductible1) A corporation may choose to use debt financing because a) it has an income tax advantage. b) it typically has a higher cost of capital than equity. c) it carries voting rights. d) it reduces financial leverage. 2. The effective rate of interest on bonds a) is the interest rate specified on the bond certificate. b) is the market rate of interest when the bonds are actually sold. c) is the market rate of interest on the date of public announcement. d) none of these choices.
- Which of the following are true about debt and equity interest payments are generally tax deductible but dividends are not debt returns are limited to repayment of principal and interest potential equity returns are infinite liabilities and debt are the same thing all public companies pay dividendsMatch the following terms to their correct definitionOne of the primary reasons for investing in debt securities includes a. Deducting interest payments for tax purposes.b. Receiving dividend payments.c. Earning interest revenue.d. Acquiring ownership control in other companies.
- Which is not a benefit of debt to the corporation?a. interest payments are tax deductibleb. when debt is used heavily, it increases stock valuec. In periods of inflation, debt is paid back with amounts that are worth less than the ones borrowed.d. compared to equity, debts have a lower cost of capitale. answer not givenIf the calculated NPV is negative, then which of the following must be true? O No answer text provided. O The discount rate used is equal to the IRR. O The discount rate used is less than the IRR. O The discount rate used is greater than the IRR.Determine whether it is common stock, preferred stock, or bonds that has the feature best related to the following considerations. a. Ownership and control of the firm b. Obligation to provide return c. Claims to assets in bankruptcy d. High cost of distribution e. Highest return f. Highest risk g. Tax-deductible payment h. Payment partially tax-exemptto corporate recipient
- Most bonds: Select the correct response: give bondholders a voice in the affairs of the corporation are interest-bearing obligations of governments or corporations are floating-rate securities are money market securitiesWhich of the following are correct statements concerning corporate dividends? a. Dividends are legal liability of a corporation to its shareholders b. Dividends paid by a corporation to another corporation receive preferential tax treatment (minimum 70% exclusion from taxable income) c. Dividends are generally paid to the shareholders before the payment of interests to the bondholders d. Dividends payments are considered tax deductible expense while interest payments are not8. Which statement is true? Group of answer choices a. Preferred stock is similar to corporate bonds because the corporation usually pays the holders of the securities a fixed amount. b. Preferred stockholders have priority over bondholders when it comes to the payment of c. Preferred stock is similar to corporate bonds because dividends on preferred stock, like interest on bonds, are a tax-deductible expense to the corporation. d. Preferred stockholders are considered to be the true owners of corporations.