None QS 10-1 (Static) Advantages of bond financing LO A1Identify the following as either an advantage or a disadvantage of bond financing for a company./p>a. Bonds do not affect owner control.b. A company earns a lower return with borrowed funds than it pays in interest.c. A company earns a higher return with borrowed funds than it pays in interest.d. Bonds require payment of periodic interest.e. Interest on bonds is tax deductible.f. Bonds require payment of par value at maturity.

Advantage: Bonds do not affect owner controlWhen a company issues bonds, it is essentially borrowing…

Answered: QS 10-1 (Static) Advantages of bond…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Financial Accounting Question: 27
Identify the following as either an advantage (A) or a disadvantage (D) of bond financing for a company. a. Requires payments of both periodic interest and par value at maturity. b. Bonds require payment of par value at maturity. C. Bonds do not affect owner control. d. A company earns a lower return with borrowed funds than it pays in interest. e. A company earns a higher return with borrowed funds than it pays in interest. f. Bonds require payment of periodic interest.
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Identify the following as either an advantage or a disadvantage of bond financing for a company. a. Bonds do not affect owner control. b. A company earns a lower return with borrowed funds than it pays in interest. c. A company earns a higher return with borrowed funds than it pays in interest. d. Bonds require payment of periodic interest. e. Interest on bonds is tax deductible. f. Bonds require payment of par value at maturity.
Question 2 A lower bond rating directly translates into a higher, higher interest b. lower, higher interest Oc. higher; higher default d. lower, lower interest O e. higher; lower interest prices and PERS rates on the firm's bonds.
Exercise 2.4 Compared to bonds with longer maturity, bonds with shorter maturity respond. dramatically to changes in interest rates.
____ occurs when a firm calls a relatively high interest rate issue and replaces it with a lower interest rate issue. a. Bond refunding b. A call feature c. A sinking fund d. Indenture refinancing
Multiple Choice Question If a company can skip the interest payment on a bond without being in default, the bond is likely a(n) Blank______ bond. Multiple choice question. real return convertible retractable income
________ bonds are characterized by interest payments that are required only when earnings are available from which to make such payment Floating rate Revenue Junk Mortgage

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