Quiz 1

What does debt financing involve?

• Offering insurance products

• Borrowing money with an obligation to repay

• Selling a portion of equity in the company

• Providing quick cash loans without collateral

What is the primary purpose of equity financing?

• Issuing bonds to raise capital

• Selling ownership stake in the company

• Providing short-term loans to employees

• Acquiring assets through leasing agreements

What is the main difference between debt financing and equity financing?

• Debt financing involves selling ownership stake, while equity financing involves borrowing money

• Debt financing involves borrowing money with an obligation to repay, while equity financing involves selling ownership stake

• Debt financing involves providing quick cash loans without collateral, while equity financing involves offering insurance products

• Debt financing involves acquiring assets through leasing agreements, while equity financing involves issuing bonds to raise capital

What is a loan?

• Money given by banks without any need to pay back

• A sum of money borrowed that incurs debt and must be paid back with interest

• A transaction that transfers risk from one party to another

• Small credits offered to individuals or businesses by lending companies

Which of the following is not needed in applying for a loan?

• Valid ID

• Birth Certificate

• Loan Application form

• Payslip

It focuses on spreading out loan payments over time.

• Interest

• Mortgage

• Loan

• Amortization

Principal payment is fixed, and the interest expense is adjusted based on the declining principal balance

• Equal total payment

• Equal principal repayment

• Equal balance

• Equal interest

The principal plus the total interest earned over a stated period

• Interest

• Amortization

• Present Value

• Future Value

Formula for Simple interest

• I = MRT

• I = LRT

• I = 143

• I = PRT

What is the purpose of amortization in loan repayment?

• To calculate the total interest paid over the loan term

• To spread out the principal repayment over time

• To determine the loan eligibility of the borrower

• To provide insurance coverage for the loan amount