What is one benefit of a firm issuing bonds over stocks?

The advantage of a firm issuing bonds instead of stocks lies in the tax treatment of interest payments. When a company issues bonds, the interest payments made to bondholders are tax-deductible expenses. This means that the company can reduce its taxable income by the amount of interest it pays on its bonds. As a result, this can lead to lower overall tax liability for the firm.

On the other hand, when a company issues stocks, any dividends paid to shareholders are not tax-deductible. This difference is significant as it impacts a company's cash flows and overall financial strategy. By utilizing debt financing through bonds, a firm can effectively manage its taxes and possibly increase its profit margins compared to equity financing through stock issuance.

The other options do not accurately reflect the benefits associated with bond issuance. For instance, bondholders do not receive ownership stakes in the firm; they are creditors. Additionally, bonds do need to be repaid unless they are convertible or defaulted on, and while bonds can be long-term liabilities, this aspect alone does not constitute a unique benefit over stock issuance.