Question

Which of the following is not a financial advantage to companies using debt

a) debt is paid back in cheaper dollars during inflationary periods
b) bondholders jave no control over the actions of management
c) cost of debt can lower the weighted overall cost of capital
d) interest payments are tax deductible

Answer 1

Answer: b) bondholders have no control over the actions of management

Step-by-step explanation:

Bondholders have no control over the actions of management as management are only accountable to shareholders.

While this may be an advantage it is not a financial advantage as it does not involve money whilst the rest do. Debt being paid back in cheaper dollars during inflationary periods for instance involves money being saved so is a financial advantage and so are the rest.