Which of the following is a characteristic of equity financing?
Sources of Funds in Finance

Quiz
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Business
•
University
•
Medium
Judah Ng'ang'a
Used 19+ times
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20 questions
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1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
It involves borrowing money that must be repaid with interest.
It involves selling ownership shares in the company.
It does not dilute ownership of the company.
It is a short-term source of funds.
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is a primary advantage of debt financing?
It does not require repayment.
Interest payments are tax-deductible.
It dilutes ownership of the company.
It is not subject to interest rate fluctuations.
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Retained earnings are:
Funds borrowed from financial institutions.
Profits that are reinvested in the business.
Funds raised through issuing new shares.
Dividends paid to shareholders.
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Preferred stock typically has which of the following features?
Voting rights in the company.
Fixed dividend payments.
Higher claim on assets than debt holders.
No dividend payments.
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which of the following is considered an internal source of funds?
Issuing bonds.
Bank loans.
Retained earnings.
Selling new shares.
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Equity financing is often preferred by companies because:
It does not require interest payments.
It increases the company's debt burden.
It must be repaid within a short period.
It is less risky than debt financing.
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which of the following is a disadvantage of debt financing?
It dilutes ownership of the company.
It requires regular interest payments.
It does not provide tax benefits.
It is not available to small businesses.
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