What are the main differences between corporate debt and equity? Why do some firms try to issue equity in the guise of debt?
There are two main types of financing for a business, debt or equity financing. Debt financing tends to be the type of financing you receive from a traditional bank loan and equity financing tends to be financing you receive from venture capital into your business from outside investors.
The benefit of debt financing is that it is a fixed sum financing and you will pay down the debt over time to a zero sum balance without any further obligation to the lender. ...
There are two main types of financing for a business, debt or equity financing. This solution explores both and explains the difference between the two. It also explains why some firms try to issue equity in guise of debt.