ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Financial capital refers to a company’s cash, credit, or other funding purchasing power. Two principal sources of financial capital are debt and equity; retained earnings can also be considered a part of it. Debt constitutes borrowing from lenders, bank loans, or issuing bonds as securities.

Detailed explanation-2: -Financial capital is raised through capital markets in two ways-by selling bonds, which are like loans that the business will repay at a later date with interest, or by selling stocks, which are sold in exchange for the partial ownership of the business.

Detailed explanation-3: -What Are Examples of Capital? Any financial asset that is being used may be capital. The contents of a bank account, the proceeds of a sale of stock shares, or the proceeds of a bond issue all are examples. The proceeds of a business’s current operations go onto its balance sheet as capital.

Detailed explanation-4: -The two types of share capital are common stock and preferred stock. Companies that issue ownership shares in exchange for capital are called joint stock companies.

Detailed explanation-5: -A corporation’s share capital, commonly referred to as capital stock in the United States, is the portion of a corporation’s equity that has been derived by the issue of shares in the corporation to a shareholder, usually for cash.