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Explain the various sources of financing. what is meant by security financing? |
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Answer» Equity financing - This refers to that part of capital which is raised by issuing SHARES and securities of a company. In such TYPE of financing the person who buys these shares becomes the owner of the company. Debt financing - This refers to that part of capital which is borrowed from people for a fixed period of time. This amount has to be repaid and the person LENDING money becomes a creditor of the company. Lease financing - Money is raised by offering tangible assets like MACHINERY, building etc under a lease agreement for specified period of time. In return the other party has to MAKE lease payments annually, biannually or after regular intervals. Security financing - This type of financing is a kind of mortgage where an asset is kept as security with the creditor in return of funds. |
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