Question:
Which of the following best describe the main differences between debt and equity?
A. Debt does not represent an ownership interest in the firm, while equity generally does represent a share of ownership.
B. Unpaid debt is a legal liability of the firm; dividends on common stock are not legal liability of the firm.
C. Interest paid on debt is tax-deductible, dividends paid on equity is not.
D. Only a and c
Debt & Equity:
Debt and equity are the two main sources of capital for a company. The proportions of each capital component in a firm's capital are different for different companies and industries and mainly depend on the needs of a firm.
Answer and Explanation:1
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The answer is D. Only a and c.
Some of the main features that distinguish debt from equity are those described in A. (regarding ownership) and in C....
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