Asked by Courtney Morris on Jun 09, 2024

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Which is an example of debt financing?

A) Issuing stock to raise capital
B) Using the company's earnings to fund a project
C) A leasing agreement
D) Issuing bonds to raise capital

Debt Financing

The practice of borrowing funds from external sources, typically through loans or bonds, to finance business activities.

Issuing Bonds

The act of a corporation or government borrowing money from investors by selling debt securities, known as bonds, which promise to repay the principal along with interest on specified dates.

Leasing Agreement

A contract where one party agrees to rent property owned by another party for a specified time period in exchange for payment.

  • Identify the differences between borrowing (debt financing) and raising money through the sale of shares (equity financing).
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DT
Danielle ThompsonJun 13, 2024
Final Answer :
D
Explanation :
Issuing bonds is an example of debt financing, where a company borrows money from investors and promises to pay interest and repay the amount borrowed at a future date. Choices A and B relate to equity financing and using earnings to fund projects, respectively. Option C is a form of operating lease, which is a method of financing to acquire an asset, but not specifically a debt financing option.