1. How many of the following is/are advantage(s) of issuing
bonds to raise capital? (A) Does not require interest payment when
the entity is incurring severe losses; (B) Generally requires fixed
interest payments which can easily be used in budgeting; (C)
Interest is a tax-deductible expense.
2. How many of the following is/are advantage(s) of issuing
ordinary shares to raise capital? (A) No contractual obligation to
pay dividends; (B) Presence of easily determinable maturity date;
(C) Dividends are tax-deductible expenses.
3. Which of these statements are true? [S1] Share warrants are
often attached to debt instruments to entice creditors to also
become ordinary shareholders especially when the entity would be
unable to pay interests. [S2] An entity needing a large sum of
financing would prefer issuing bonds with share warrants over bonds
with conversion rights.
4. Which of these statements are true? [S1] When unrelated
traders buy and sell stocks, the entity which issued the shares
will be able to obtain additional financing. [S2] The underwriting
syndicate is an underground group of individual assisting in the
issuance of shares and the collection of cash
investments.
1. How many of the following is/are advantage(s) of issuing bonds to raise capital? (A) Does not require interest paymen
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