BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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It is a hybrid of debt and equity financing.
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It is the highest-risk form of debt, but it offers some of the highest returns.
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It allows companies with less collateral to secure funding for growth.
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All of the Above
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Detailed explanation-1: -Mezzanine financing is a hybrid of debt and equity financing that gives the lender the right to convert the debt to an equity interest in the company in case of default, generally, after venture capital companies and other senior lenders are paid. In terms of risk, it exists between senior debt and equity.
Detailed explanation-2: -Mezzanine financing is a hybrid system of financing, which incorporates the features of equity and debt, both. It gives the lender a right to convert their debt into equity shares, in case of a default. Mezzanine debt is subordinated debt, and close to being the last to be paid off. It is senior only to equity shares.
Detailed explanation-3: -Mezzanine Financing is an alternative form of hybrid financing that blends features of debt and equity. Common examples include 2nd lien debt, senior/subordinated bonds, and preferred stock.
Detailed explanation-4: -Mezzanine loans assist in generating more capital for a business in addition to allowing it to increase its returns on equity and show a higher bottom-line profit. Mezzanine loans typically do not require payment during the term of debt, only at the end of the term. This enables a company to improve its cash flow.
Detailed explanation-5: -Mezzanine financing is a form of funding that is positioned partway between the equity and debt financings used by a business. It is designed to provide cash to an existing business that requires the funds to grow, or for a corporate restructuring.