Understanding Debt and Equity Capital for Financial Markets

The video explores the differences between debt and equity capital as methods of raising finance. Debt capital involves borrowing money with the obligation to repay with interest, while equity capital involves selling ownership stakes in exchange for funds. The video discusses the roles of borrowers and lenders, the concept of interest, and the implications of using debt and equity. It emphasizes the importance of balancing these two forms of capital to maintain financial stability and optimize investment portfolios.

How does equity capital differ from debt capital in terms of repayment obligations?

What are the potential risks associated with holding a portfolio that consists solely of equity?

What are the implications of issuing too much debt for a company?

Summarize the key points regarding the balance between debt and equity financing.