An advantage of bond financing is that it does not affect shareholder control.Group startsTrue or False
Question
An advantage of bond financing is that it does not affect shareholder control.
Group starts True or False
Solution
True or False Question Analysis
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Understanding Bond Financing
Bond financing involves raising capital through the issuance of bonds, which are debt securities. Investors who purchase bonds are essentially lending money to the issuer in exchange for periodic interest payments and the return of the bond's face value at maturity. -
Impact on Shareholder Control
Unlike equity financing, where shares are sold to raise funds, bond financing does not involve giving away ownership stakes in the company. This means that existing shareholders retain their control over company decisions since bondholders do not have voting rights. -
Conclusion
Given that bondholders do not possess ownership shares and thus do not influence company governance decisions, the statement is accurate.
Final Answer
True: An advantage of bond financing is that it does not affect shareholder control.
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