Trading on equity means
A)Taking advantage of equity share capital to borrow funds on reasonable basis
B)Taking advantage of the conditions prevailing in the capital market
C)Taking advantage of prevailing rate of interest
D)None of the above.

Question

Quizplus · Accepted Answer

Trading on equity refers to the strategy of borrowing funds at a lower interest rate than the return that the company expects to earn on those funds, with the aim of increasing the returns for equity shareholders. This involves leveraging the equity share capital to secure additional financing.

Trading on Equity Means