Categorize the THREE (3) ways in which capital can be transferred from capital providers to the...

Categorize the THREE (3) ways in which capital can be transferred from capital providers to the capital users in the market. Provide your own examples.

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Expert Solution

Three ways by which capital is transferred from capital providers to Capital users in market are as follows-

A. Equity financing through which capital is transferred by equity shareholders to the company by exchange of ownership in consideration of the equity share of the company.

B. Capital is also provided by Debt financing by various commercial banks in which commercial banks will be issuing debt financing to the business organisation and it will help the business organisation in fulfillment of their capital needs.These debt financing will be having a rate of interest which are payable by the company.

3. It can also be provided in form of money market instruments like commercial papers and other short term financial assets so this organisation will be issuing short term financial papers in consideration of various debt financing. These are highly risky because they needs quick repayment.

jeff jeffy answered 1 year ago

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