An example of debt financing for any form of business organization is
A) buying back bonds.
B) borrowing from a bank.
C) issuing new stock.
D) buying back previously issued stock.
E) using undistributed profits.

Question

Quizplus · Accepted Answer

Borrowing from a bank is an example of debt financing, where a business borrows money and pays it back with interest over a set period of time. Buying back bonds (A) and buying back previously issued stock (D) are examples of equity financing, where a company uses its own funds to repurchase its own debt or shares. Issuing new stock (C) is also equity financing, where a company raises funds by selling ownership shares to investors. Using undistributed profits (E) is a form of retained earnings, where a company reinvests its profits rather than distributing them to shareholders or using them to finance debt.

An Example of Debt Financing for Any Form of Business