Question : Case Study: ABC Corporation - Financing Growth Strategies
ABC Corporation, a leading manufacturing company, is looking to finance its growth strategies. The company is exploring various sources of business finance to achieve its expansion goals.
Questions : Different Sources of Finance
In the context of financing, what do we call long-term debt securities issued by companies?
Option 1: Equity shares
Option 2: Preference shares
Option 3: Debentures
Option 4: GDRs
Correct Answer: Debentures
Solution : The correct answer is (c) Debentures
Debentures are long-term debt instruments that companies issue to raise funds. Holders of debentures are creditors to the company and are entitled to receive fixed interest payments and the repayment of the principal amount at maturity. Unlike equity shares, debentures do not represent ownership in the company; rather, they are a form of borrowing for the issuing company.
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