Which form of financing requires repayment, regardless of whether the company receiving the funds does well?

Question

Quizplus · Accepted Answer

A loan is a form of financing that requires repayment, regardless of whether the company receiving the funds does well. This is because loans involve borrowing money that must be repaid with interest within a specified time frame. If the company fails to repay the loan, it may face penalties and damage to its credit rating. In contrast, an investment involves taking a stake in the company and sharing in its profits and losses. While an investor may lose their investment if the company does poorly, they do not have the same legal obligation to repay the funds as a borrower does with a loan.

Which Form of Financing Requires Repayment, Regardless of Whether the Company