From the standpoint of the issuing company, a disadvantage of using bonds as a means of long-term financing is that
interest must be paid on a periodic basis regardless of earnings. the bondholders do not have voting rights.
income to stockholders may increase as a result of trading on the equity.
bond interest is deductible for tax purposes. 11-Multiple Choice Question 194 The times interest earned ratio is computed by dividing income before interest expense by interest expense. net income by interest expense. income before income taxes and interest expense by interest expense. income before income taxes by interest expense. 12- Multiple Choice Question 152
If the market interest rate is greater than the contractual interest rate, bonds will sell
at a discount. only after the stated interest rate is increased. at face value. at a premium. 13- Multiple Choice Question 158 The market interest rate is often called the