Which of the Following Statements Holds True for Equity Financing

question 7

Multiple Choice

Which of the following statements holds true for equity financing?

• A)It refers to the process of financing major projects such as plant expansion, entry into new markets, or research and development by taking loans from private banks.
• B)It refers to the process of raising capital by borrowing the money and agreeing to repay the entire amount plus agreed-upon interest at a specific date in the future.
• C)It refers to raising capital by selling shares of stock.
• D)It refers to a set of procedures used to estimate the economic value of an owner's interest in a business.
• E)It refers to a technique that companies use to reduce the costs of cross-border payments between subsidiaries.

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Definitions:

Indirect Method

A financial reporting approach used to generate the statement of cash flows, where net income is adjusted for changes in non-cash accounts to reveal cash generated or consumed by operating activities.

Voting Stock

Shares that grant the holder the right to vote on company matters, typically influencing board elections and corporate policy.

Cash Dividend

A payment made by a company out of its earnings to its shareholders, usually in the form of cash.

Net Income

The income a company retains following the deduction of all costs and taxes from its total earnings.