The risk of the debt capital is less than that of other long-term cont

The risk of the debt capital is less than that of other long-term contributors of capital because ________.

A) they have a lower priority of claim against any earnings or assets available for payment
B) they have the stockholders’ personal assurance for all future interest payments
C) there is no interest rate risk as the interest rate is predetermined
D) the tax-deductibility of interest payments lowers the debt cost to a firm substantially

ANSWER

D