Which one of the following is a viable alternative to term-loans for raising debt
finance by large publicly traded firms?
(a) Shares
(b) Debentures
(c) Asset loans (d) Gold loans
Answers
Answer:
Debentures i think this is the correct answer
The viable alternative to term- loans for raising debt finance by large publicly traded firms are debentures due to following reasons:
- For raising long - term debt instruments used are debentures.
- The creditors of company are known as the debentures holders.
- The principal of call and put feature and the promises to pay interest by the borrower is just as same as the obligations made by the company towards its debentures holders.
- The option to redeem the debentures before the maturity date at a certain price is provided to the issuing company by the call feature which may be carried by debentures .
- Debentures may be issued by the company at the option of debentures holders and here the debentures are convertible into equality shares.