Question

1.Explain the diffrence between equity finance and debt finance with example?
2. Explain the difference between financial market and financial intermediary?

long answr not acceptable

Answer 1

1) Equity financing means selling company's stock and increasing owner's equity of a sole proprietorship . For example , an entrepreneur starting a start up worth $60,000,000 and have all the shares of the company , later if he need to acquire an asset he can sell some of his stock to the willing investor and can buy that asset.

Debt financing means borrowing money in order to acquire an asset , this doesn't involve proprietorship.For example , if the same entrepreneur doesn't want to sell shares of his company he can borrow money from the market to acquire an asset .

2)Financial markets is a channel; of providing buying and selling facilities of stocks , bonds , securities etc For ex: NSE BSE

Financial intermediary acts as a mediator between lenders- savers and borrowers-spenders that is it transfers surplus funds from savers to the ones who need these funds for further profitable investments . For ex: Banks