Corporations Try to Create Hybrid Securities That Look Like Equity

Corporations try to create hybrid securities that look like equity but are called debt because:

A) debt interest expense is tax deductible.
B) bankruptcy costs are eliminated or reduced.
C) these securities have lower risk than debt.
D) Both debt interest expense is tax deductible; and these securities have lower risk than debt.
E) Both debt interest expense is tax deductible; and bankruptcy costs are eliminated or reduced.

Correct Answer:

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