12 Questions
What is the main purpose of covenants in a debt agreement?
To restrict the use of loaned funds and protect the investor
Which security offers the highest reward with the highest risk?
Common Stocks
What is the primary difference between debt and equity financing?
Debt financing involves repayment of borrowed capital, while equity financing does not
What is the benefit of retained earnings in a company?
It represents the cumulative net earnings of a company after dividend payments
What is the primary advantage of using debt financing?
It does not require additional shareholder investment
What is the purpose of collateral in a debt agreement?
To secure the repayment of borrowed capital
What is the primary purpose of the Sinking Fund Method in bond repayment?
To set aside funds to pay off debt over time
What is the main advantage of investing in a Mutual Fund?
Diversification at a low cost
Which stock market index tracks the performance of 300 different stocks?
NASDAQ
What is the main difference between the Primary and Secondary markets?
Primary market is for newly listed shares, Secondary is for existing shares
What is the purpose of a Convertible Bond?
To allow bondholders to exchange bonds for shares
What does the P/E ratio indicate in stock market analysis?
The price of the share relative to its earnings
Understand the key differences between debt and equity as sources of long-term capital. Learn about the characteristics of debt, including collateral, tax-deductible interest, and covenants. Discover how equity works and its implications for your company's capital structure.
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