What is a primary characteristic of debt financing?Answer areaa) Transfer of ownership rightsd) Sharing of profits with investorsb) No obligation to repay principalc) Fixed repayment schedule

Debt financing is essentiallyMultiple Choiceborrowing money.selling ownership.borrowing ownership.selling money.the same as stock.

Which of the following debt repayment profiles involves a growing principal amount over time?Pay in kind debtEquityMezzanine financeSenior Debt

Identify a true statement about debt financing.Multiple choice question.It is also termed asset-based financing.It never requires an additional fee.It is also called reward-based funding.It does not require an asset as a collateral.

Advantages of debt financing over equity financing are that:Multiple Choicerepayment of debt principal is optional.interest payments on debt are not tax deductible.control is not diluted.more money is available.

A debt contract is incentive compatibleA) if the borrower has the incentive to behave in the way that the lender expects and desires,since doing otherwise jeopardizes the borrower's net worth in the business.B) if the borrower's net worth is sufficiently low so that the lender's risk of moral hazard issignificantly reduced.C) if the debt contract is treated like an equity.D) if the lender has the incentive to behave in the way that the borrower expects and desires