Question

How MIGHT stock issues be preferable to borrowing money for firms looking to finance operations? A) Firms might have increased oversight from and payment of dividends to investors. B) Firms might seek relief from creditors by passing the debt to investors. C) Firms might want the cash on hand faster by agreeing to loans. D) Firms might want to avoid paying interest charges.

Answer 1

Answer: D) Firms might want to avoid paying interest charges.

Explanation: Firms might want to avoid paying interest charges, which could make stock issues more preferable to taking out additional loans. The firm is still liable for any debt, regardless of income source. A shorter turn-around time might be a benefit of borrowing money, not stock issues.