Which of the following statements holds true for debt financing? A.It refers to

Question

Which of the following statements holds true for debt financing?

A.It refers to the process of financing long-term outlays for major projects such as plant expansion, entry into new markets, or research and development. B.It refers to raising capital by borrowing the money and agreeing to repay the entire amount plus agreed-upon interest at a specific date in the future. C.It refers to raising capital by selling shares of stock. D.It refers to a set of procedures used to estimate the economic value of an owner’s interest in a business. E.It refers to technique that companies use to reduce the costs of cross-border payments between subsidiaries.

Explanation / Answer

B. It refers to raising capital by borrowing the money and agreeing to repay the entire amount plus agreed-upon interest at a specific date in the future However debt financing can differ from instruments to tinstrument. Various types of debt at available in market eg: - debts with floating rate of interest, fixed rate of interest, Specific repayment plan, repayment of part principal and interets at certian frequency, repayment in lumpsome etc

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