ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Debt financing can be in the form of installment loans, revolving loans, and cash flow loans. Installment loans have set repayment terms and monthly payments. The loan amount is received as a lump sum payment upfront. These loans can be secured or unsecured.

Detailed explanation-2: -Equity financing is when you receive funding in exchange for shares in your business. Angel investors, venture capitalists and crowdfunding are common types of equity financing.

Detailed explanation-3: -In simple terms, a bond is loan from an investor to a borrower such as a company or government. The borrower uses the money to fund its operations, and the investor receives interest on the investment. The market value of a bond can change over time.

Detailed explanation-4: -For example, you might buy a 10-year, $10, 000 bond paying 3% interest. In exchange, your town will promise to pay you interest on that $10, 000 every six months and then return your $10, 000 after 10 years.