Question: Select the correct words in the following table, which shows the principal differences between debt capital and equity capital. Bonds (Debt) Stock (Equity) Annual payments

Select the correct words in the following table, which shows the principal differences between debt capital and equity capital.

Bonds

(Debt)

Stock

(Equity)

Annual payments are required.

[Yes / No] [Yes / No]

Principal payments are required. [Yes / No] [Yes / No]

Therefore, risk to the entity is [Higher / Lower] [Higher / Lower]

But its cost is relatively [Higher / Lower] [Higher / Lower]

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