Question
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
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.
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