Capital transfer: suppliers and users of capital
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Describe the different ways in which capital can be transferred from suppliers of capital to those who are demanding capital.
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Solution Summary
The 320 word solution is a good discussion about capital transfer from both sides: those who have capital to invest and those who need capital. The classification of capital is explained for both including a list of what types of investment the capital might be.
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There are basically two ways to transfer capital.
1. The supplier of capital either invests or lends.
2. The user of capital either allows investment or borrows.
The main difference between investing and lending/borrowing is whether the capital becomes an equity interest or a debt arrangement.
Let's say you have capital you want to put to work. Your choices are:
1. As an investor, you can buy stock in companies, either common or preferred stock
2. As a ...
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