Equity and Debt Financing Basics
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Questions and Answers

What is the primary classification of capital based on?

  • The sources of funds, the period for which money is contributed, and the cost of the funds to the firm
  • The contributors of funds, the period for which money is contributed, the cost of the funds to the firm, and the rights that accrue to the contributors of the funds (correct)
  • The contributors of funds and the cost of the funds to the firm
  • The contributors of funds and the period for which money is contributed

    • What are individuals or institutions contributing debt capital called?

  • Equity holders
  • Lenders (correct)
  • Promoters
  • Shareholders

    • What do outside investors become when they contribute equity capital to a business?

  • Shareholders (correct)
  • Promoters
  • Lenders
  • Equity holders

    • What are funds brought in by promoters and owners of the business called?

    <p>Equity capital</p> Signup and view all the answers

    When can equity capital be brought into a business?

    <p>At the start of a business or at a later date as the business grows</p> Signup and view all the answers

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