Final answer:
Issuing stock has several benefits for a corporation, including no interest expense and creating no traditional liabilities, but it does not generally result in higher earnings per share as it can dilute the shares. Hence, option b is the exception among the listed advantages. Option b
Step-by-step explanation:
When a corporation issues stock, there are several advantages that it experiences, which are distinct from other forms of financing such as bank loans or issuing bonds. One significant advantage is that issuing stock creates no interest expense which must be paid, allowing the corporation to access capital without the burden of regular interest payments.
Another advantage is that issuing stock creates no liabilities for the corporation in the traditional sense because stockholders do not have to be repaid like lenders or bondholders.
However, issuing stock is not without its disadvantages, and one of these is not always resulting in a higher earnings per share (EPS). Issuing new stock dilutes the ownership stake of existing shareholders, and if the capital raised does not lead to a proportional increase in net earnings, it can result in lower EPS.
Moreover, issuing stock can be less risky to the issuing corporation compared to debt instruments, although this comes at the cost of relinquishing some control, as the corporation becomes responsible to the board of directors and to the shareholders.
Therefore, option b) generally results in a higher earnings per share is incorrect because issuing stock can dilute EPS if the net income does not increase accordingly to offset the increased number of shares. Option b