Chapter 14, Problem 1QS

Bond financing

Identify the following as either an advantage (A) or a disadvantage (D) of bond financing.

____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.