Question

Consider the following statements:

1. Equity market raises funds by providing a part of ownership of the company
2. Debt market does not confer any ownership to the holder

Which of the above are correct?

• A.
  1 only
• B.
  2 only
• C.
  Both 1 and 2
• D.
  None of the above

Answer 1

The correct option is C

Both 1 and 2
Equity is the amount of capital invested or owned by the owner of a company. So, Equity market raises funds by providing a part of ownership of the company.

Debt instrument represents a contract whereby one party lends money to another, on pre-determined terms with regards to rate and periodicity of interest, repayment of principal amount by the borrower to the lender. Bonds and debentures are the major debt instruments.