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A disadvantage of bond financing is: Multiple Choice Bonds pay periodic interest and the repayment of par value at maturity. It allows firms to trade on the equity. Bonds do not affect owners' control. Interest on bonds is tax deductible. Bonds can increase return on equity.

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jepessoa

Answer:

Bonds pay periodic interest and the repayment of par value at maturity.

Explanation:

The main disadvantages that businesses face when issuing bonds are:

  1. bonds pay coupons either semiannually or annually, and the company needs to have the money to pay them
  2. bonds increase the risk of insolvency, AKA bankruptcy, which increases the cost of equity
  3. since bonds require interest payments (coupons), they can potentially decrease return on equity

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