A disadvantage of bonds in comparison to stocks is that __________ reduce/reduces the net income and profitability of the company

interest expense

cash dividends

1. What best defines a bond?

		A debt issued by a corporation to its investors
		A contract between a creditor and a borrower
		A debt that must be repaid in less than 1 year
		A share in the ownership of a corporation

1. Feldman Enterprises has an operating cycle of 10 months. How much time does Feldman have to repay its current liabilities?

   60 days

   3 years

   10 months

   1 year

2. What is a disadvantage of bonds in comparison to stocks?

3. 		If a company chooses to issue bonds, the existing bondholders will own a smaller proportion of the company's bonds.
   		Interest expense reduces the net income and profitability of the company.
   		Employees who are owed back pay and retirement benefits, as well as preferred stockholders, are paid before bond holders receive anything.
   		Interest is not a tax deductible expense.