Equity financing is riskier than debt financing because interest must be paid regularly and the principal must be paid on maturity.

Question

Quizplus · Accepted Answer

Equity financing does not require regular interest payments or repayment of principal as debt financing does; instead, it involves selling shares of the company, which may dilute ownership but does not entail fixed repayment obligations.

Equity Financing Is Riskier Than Debt Financing Because Interest Must