When a Company Needs Funds to Finance the Expansion of Its

Multiple Choice

When a company needs funds to finance the expansion of its operations, which of the following is not an advantage of issuing bonds rather than issuing stock?

A) Stockholders remain in control as bondholders cannot vote or share in the company's earnings.
B) Interest expense is tax deductible but dividends are not.
C) Bonds can usually be issued at a low interest rate and the proceeds can be invested to earn a higher rate.
D) The dates for the interest and maturity payments are fixeD.The fixed payment dates create inflexibility and therefore increase bankruptcy risk.