141. Which of the following statements is true? A. U.S non- financial firms tend to use more debt than equity financing B. Bondholders are generally granted voting rights equal to those of common shareholders . C. Debt increased the possibility of financial distress D. Payments of both interest and dividends are tax deductible as business expenses E. Unpaid common stock dividends can force a firm into liquidation 141. Which of the following statements is true? A. U.S non- financial firms tend to use more debt than equity financing B. Bondholders are generally granted voting rights equal to those of common shareholders . C. Debt increased the possibility of financial distress D. Payments of both interest and dividends are tax deductible as business expenses E. Unpaid common stock dividends can force a firm into liquidation A. U.S non- financial firms tend to use more debt than equity financing B. Bondholders are generally granted voting rights equal to those of common shareholders . C. Debt increased the possibility of financial distress D. Payments of both interest and dividends are tax deductible as business expenses E. Unpaid common stock dividends can force a firm into liquidation Solution Answer is A. U.S non- financial firms tend to use more debt than equity financing Other statements are false as below: B. Bondholders are lenders to the company and they are not treated at par with common shareholders. C. Debts are an important of the capital structure. An all equity firm is very risky as compared to an firm with optimal blend of debt and equity. D. Dividends are not deductible expense for tax purpose E. Common stock dividends cannot lead liquidation as common stock dividend is not an obligation for company..

1. 141. Which of the following statements is true?
A. U.S non- financial firms tend to use more debt than equity financing
B. Bondholders are generally granted voting rights equal to those of common shareholders .
C. Debt increased the possibility of financial distress
D. Payments of both interest and dividends are tax deductible as business expenses
E. Unpaid common stock dividends can force a firm into liquidation
141. Which of the following statements is true?
A. U.S non- financial firms tend to use more debt than equity financing
B. Bondholders are generally granted voting rights equal to those of common shareholders .
C. Debt increased the possibility of financial distress
D. Payments of both interest and dividends are tax deductible as business expenses
E. Unpaid common stock dividends can force a firm into liquidation
A. U.S non- financial firms tend to use more debt than equity financing
B. Bondholders are generally granted voting rights equal to those of common shareholders .
C. Debt increased the possibility of financial distress
D. Payments of both interest and dividends are tax deductible as business expenses
E. Unpaid common stock dividends can force a firm into liquidation
Solution
Answer is A. U.S non- financial firms tend to use more debt than equity financing
Other statements are false as below:
B. Bondholders are lenders to the company and they are not treated at par with common
shareholders.
C. Debts are an important of the capital structure. An all equity firm is very risky as compared to
an firm with optimal blend of debt and equity.
D. Dividends are not deductible expense for tax purpose
E. Common stock dividends cannot lead liquidation as common stock dividend is not an
obligation for company.