A disadvantage of using bonds instead of stock as a method of long-term financing is that with bonds:
A) interest must be paid regardless of the level of earnings.
B) interest expense is tax deductible.
C) bonds do not dilute stockholders' proportionate ownership.
D) issuing bonds results in higher earnings per share than issuing common stock.
A
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If an owner takes his property off the market for a definite period of time in exchange for some consideration, but he grants an individual the right to purchase the property within that period for a stated price, this is called a(n)
A) option. B) contract of sale. C) right of first refusal. D) installment agreement.
The primary difference between entering into a gamble and purchasing insurance is that
A) in a gamble the odds are known with certainty. B) with all types of insurance you are always financially better off, whereas, with gambles, you are always financially worse off. C) a gamble involves pure risk, whereas insurance involves speculative risk. D) gambling is in many circumstances illegal and insurance is legal.