BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
TRUE
|
|
|
FALSE
|
Detailed explanation-1: -Debt financing occurs when a company raises money by selling debt instruments, most commonly in the form of bank loans or bonds. Such a type of financing is often referred to as financial leverage.
Detailed explanation-2: -Debt financing can be difficult to obtain. However, for many companies, it provides funding at lower rates than equity financing, particularly in periods of historically low-interest rates. Another advantage to debt financing is that the interest on the debt is tax-deductible.
Detailed explanation-3: -While both words have to do with owing money, credit and debt are not the same. Debt is the money you owe, while credit is money you can borrow. You create debt by using credit to borrow money.
Detailed explanation-4: -Debt financing can be: Short-term debt financing. Long-term debt financing.