Question

Bonds are a popular source of financing because Question 24 options: bond interest expense is deductible for tax purposes, while dividends paid on stock are not. financial analysts tend to downgrade a company that has raised large amounts of cash by frequent issues of stock. a company having cash flow problems can postpone payment of interest to bondholders. the bondholders can always convert their bonds into stock if they choose.

Answer 1

Answer:

bond interest expense is deductible for tax purposes, while dividends paid on stock are not.

Explanation:

Bonds may be defined as the instrument of the indebtedness of bonds issuers to holders. A bonds helps a company to save to taxes as the bond's interest is tax deductible whereas on equity the dividend is paid after the tax profits. Thus bonds are an popular source of financing.