Indicate whether the following statement is true or false: Debt financing means exchanging partial ownership in a firm in exchange for cash

Business Dec 27, 2020

Indicate whether the following statement is true or false:

Debt financing means exchanging partial ownership in a firm in exchange for cash.

Expert Solution

The answer to the given question is False.

Debt financing implies raising funds by borrowing from financial institutions or investors who in turn get predetermined interest amount as returns. On the other hand, equity financing implies raising funds in exchange of partial ownership for the investors in the firm.

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