Debt & Equity Financing

What is the term used for borrowing money for a period of time that is often repayable in several installments?

• Line of credit

• Prime interest rate

• Debt financing

• Revenue expenditure

What is the difference between a line of credit and a promissory note?

• No maturity date

• Have to pay interest

• It is debt equity

• Reduced your equity

What is the interest incurred on a note when it reaches maturity called?

• Capital expenditure

• Interest revenue

• Interest expense

• Accounts Payable

What are capital expenditures?

• Funds borrowed from a bank

• The interest on borrowed funds

• Purchases of plant assets used in the operation of a business

• Revenue from selling stocks

What is a bond?

• A short-term promise to pay a specified amount on a specified date

• A long-term promise to pay a specified amount on a specified date with interest at stated intervals

• A plan for how borrowed funds will be used and repaid

• A record of a business's financial resources

What is usually the term for notes payable signed to fund revenue expenditures?

• 5, 10, or 20 years

• 12 months or less

• More than one year

• Indefinite

What is the term used for larger amounts borrowed through a written promise, generally with extended terms such as 5, 10, or 20 years?

• Promissory note

• Accounts Payable

• Bond

• Capital expenditure

What is the stated interest rate?

• The rate at which the bond's face value increases over time.

• The rate used to calculate the bond's maturity value.

• The rate used to calculate periodic interest payments on a bond.

• The rate of return guaranteed by the bond issuer.

What is equity financing?

• Taking a loan from individual investors.

• Selling stock to increase stockholders' equity in the business.

• Issuing bonds to raise capital.

• Assigning a par value to shares of stock.

What is the par value of a stock?

• The minimum amount of equity that must be retained in the corporation.

• The actual market value of the stock.

• The value assigned to a share of stock by state laws.

• The total amount of equity financing a corporation has.