BACHELOR OF BUSINESS ADMINISTRATION

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. As a result of taking on additional debt, the company makes the promise to repay the loan and incurs the cost of interest.

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: -Debt financing involves borrowing money and paying it back with interest. The most common form of debt financing is a loan. Debt financing sometimes comes with restrictions on the company’s activities that may prevent it from taking advantage of opportunities outside the realm of its core business.

Detailed explanation-4: -Debt instruments are assets that require a fixed payment to the holder, usually with interest. Examples of debt instruments include bonds (government or corporate) and mortgages. The equity market (often referred to as the stock market) is the market for trading equity instruments.

Detailed explanation-5: -Correct answer: Option c) They arise in the form of notes, debentures, or bonds.