4. Retained earning is simple and cheapest method of raising finance.
5. Public deposit is good source of short term financing.
6. Bond holder is creditor of the company.
7. Trade credit is not cash loan.
8. Different investors have different preferences.
9. Equity share capital is risk capital.
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Answer:
4.Retained earning is considered as internal source of long-term financing and it is a part of shareholders equity. Generally, retained earning is considered as cost free source of financing. It is because neither dividend nor interest is payable on retained profit.
5.Public deposits are an important source of financing short term requirement of company. Companies generally receive public deposits for the period ranging from 6 months to 36 months
6.Bond is a loan taken by company for medium to long period. Bond holder therefore is the creditor of the company. ... Equity shareholders are risk bearers of the company and they are having the voting rights and taking participation in management of the company. Hence bond holders are not the owners of the company.
9.Equity Share Capital is called as risk capital as equity shareholders have a claim over the residual proceeds of the company. In other words, in the event of winding up they are the last to be paid off after settling the claims of creditors and other external liabilities
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Answer:
4. Retained earning is considered as internal source of long-term financing and it is a part of shareholders equity. Generally, retained earning is considered as cost free source of financing. It is because neither dividend nor interest is payable on retained profit.
5.Public deposits are an important source of financing short term requirement of company. Companies generally receive public deposits for the period ranging from 6 months to 36 months. ... Interest is paid by companies on such deposits. The rates of interest are higher than those allowed by commercial banks.
6.According to Webster's Dictionary, a bond is an interest bearing certificate issued by a government or business, promising to pay to the holder specified sum at a specified date. In fact there is no difference between bonds and debentures. ... Bond holder therefore is the creditor of the company.
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