Asked by Annie Mueller on Jul 25, 2024
Verified
If a company uses a bond issue to raise capital, the financing is an example of:
A) equity financing.
B) debt financing.
C) lease financing.
D) debt and equity financing.
Bond Issue
The process by which a corporation or government raises funds by selling bonds to investors.
Debt Financing
Raising capital through the sale of bonds, bills, or notes to individuals or institutional investors, in exchange for lending money to the borrowing entity.
Equity Financing
The process of raising capital through the sale of shares in a company, thereby giving investors ownership interests.
- Distinguish between monetary and tangible assets, understand bond characteristics, and the principle of indebtedness.
Verified Answer
AK
Addison KelleyJul 30, 2024
Final Answer :
B
Explanation :
Bond issues are a form of debt financing where the company borrows money from investors and promises to pay them back with interest over a set period of time. This is different from equity financing where the company sells ownership shares to investors in exchange for capital. Lease financing involves renting assets instead of buying them outright. Debt and equity financing would involve a combination of borrowing and selling ownership shares to investors.
Learning Objectives
- Distinguish between monetary and tangible assets, understand bond characteristics, and the principle of indebtedness.