Answered: Give some examples of debt financing?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter14: Corporation Accounting

Section: Chapter Questions

Problem 3EA: What is the most obvious difference between debt and equity financing?

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Give some examples of debt financing?

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Step 1

Following are some examples of debt financing:

Whereas, Debentures are a corporate or government obligation, not safeguarded by an asset. Bonds are a wide range of debentures however not all bonds are debentures. Secured bonds fall into their own class and can be characterized by the insurance connected to the bond.

Step 2

Term loan: A term loan is an advance from a bank that has a set reimbursement period and either a fixed or floating interest rate for a given sum. For a current private venture with sound fiscal reports, a term loan is consistently satisfactory.

Step 3

Bank guarantee: A bank guarantee is a type of financial backstop which a loaning organization gives. The bank ensures guarantees the moneylender will ensure an account holder's commitments are met. At the end of the day, if the indebted person doesn't pay a credit, it will be remunerated by the Bank. A bank ensure helps the borrower, or account holder, to purchase items, buy hardware or draw down a credit.

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