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Exam IIA-CIA-Part3 topic 2 question 120 discussion

Actual exam question from IIA's IIA-CIA-Part3
Question #: 120
Topic #: 2
[All IIA-CIA-Part3 Questions]

Which of the following is true of bond financing, compared to common stock, when all other variables are equal?

  • A. Lower shareholder control.
  • B. Lower indebtedness.
  • C. Higher company earnings per share.
  • D. Higher overall company earnings.
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Suggested Answer: A 🗳️
by emtofid at Jan. 24, 2025, 6:06 p.m.

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emtofid
2 months, 1 week ago
Selected Answer: C
not A, bond financing does not lower SH control, maybe C
upvoted 2 times
emtofid
1 month ago
Bonds represent debt, whereas common stock represents equity. By using bond financing instead of issuing common stock, a company avoids diluting existing shareholders' ownership, leading to higher earnings per share (EPS).
upvoted 2 times
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