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What are risk financing variables?
Severity and frequency.
What are the sources of capital formation for small and medium scale enterprises?
Venture Capital market, equity financing (which could be through public stock offering or private placements ), informal risk capital (called angel financing) and debt financing.
What is maturity matching approach?
Hedge risk by matching the maturities of assets and liabilities. Permanent current assets are financed with long-term financing, while temporary current assets are financed with short-term financing. There are no excess funds.
What is LPO financing?
Financing based on invoiced amounts. For example as collateral the bank may lend you up to 70% of your total invoices to enable you to meet your contractual obligations. In return the bank has mitigated it's risk of collection and they get interest for their services.
Why do different sources of finance have different cost?
Different sources of finance have varying costs due to factors such as risk, terms of repayment, and the nature of the capital. For example, equity financing often comes with higher costs because investors seek a return that compensates for the risk of ownership, while debt financing typically has lower costs due to fixed interest rates and priority in repayment during liquidation. Additionally, market conditions and the company's creditworthiness can influence borrowing costs. Ultimately, the trade-off between risk and return determines the pricing of different financing options.
What are risk financing variables?
Severity and frequency.
How is a entrepreneur different from any other worker?
Because it take risk of financing
A firm that uses short-term financing methods for a portion of permanent current assets is assuming more risk but expects higher returns than a firm with a normal financing plan. Explain.?
By establishing a long-term financing arrangement for temporary current assets, a firm is assured of having necessary funding in good times as well as bad, thus we say there is low risk. However, long-term financing is generally more expensive than short-term financing and profits may be lower than those which could be achieved with a synchronized or normal financing arrangement for temporary current assets
What are the sources of capital formation for small and medium scale enterprises?
Venture Capital market, equity financing (which could be through public stock offering or private placements ), informal risk capital (called angel financing) and debt financing.
Which one of the folllowing is not one of the four risk management principles?
The four fundamental principles of risk management typically include risk identification, risk assessment, risk control, and risk financing. If you provide the options available, I can help identify which one does not belong to this framework.
What is maturity matching approach?
Hedge risk by matching the maturities of assets and liabilities. Permanent current assets are financed with long-term financing, while temporary current assets are financed with short-term financing. There are no excess funds.
What is LPO financing?
Financing based on invoiced amounts. For example as collateral the bank may lend you up to 70% of your total invoices to enable you to meet your contractual obligations. In return the bank has mitigated it's risk of collection and they get interest for their services.
Why were Joint-stock Companies helpful in financing colonies in North America?
Large sums of money could be raised with little risk to the investors.
Why do different sources of finance have different costs?
Different sources of finance have varying costs due to factors such as risk, time horizon, and the return expectations of lenders or investors. Higher-risk financing, like equity, often demands a greater return due to the uncertainty of returns, while lower-risk options, such as bank loans, typically have lower interest rates. Additionally, the terms and conditions associated with each financing source can also influence costs, as longer-term financing may incur higher fees or interest rates. Overall, the trade-off between risk and return plays a crucial role in determining the cost of finance.
Why do different sources of finance have different cost?
Different sources of finance have varying costs due to factors such as risk, terms of repayment, and the nature of the capital. For example, equity financing often comes with higher costs because investors seek a return that compensates for the risk of ownership, while debt financing typically has lower costs due to fixed interest rates and priority in repayment during liquidation. Additionally, market conditions and the company's creditworthiness can influence borrowing costs. Ultimately, the trade-off between risk and return determines the pricing of different financing options.
Does your credit score affect the interest rate when you apply for home financing?
Your credit score can possibly affect your interest rate when you apply for home financing. If you have a low credit score, you are considered a higher risk to the bank, and therefore, they may raise your interest rate.
What is a Government-Backed Financing?
Government backed financing is financing that has the promise of the government standing behind it. It is different from private investor financing or bank backed financing.
