📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!
  • google app store apple app store
    • ✖

      Question

      Which of the following can be considered as an example

      of Quasi-Equity financing for a company?
      A Mezzanine debt Correct Answer Incorrect Answer
      B Preference shares with flexible repayment terms Correct Answer Incorrect Answer
      C Subordinated (junior) debt Correct Answer Incorrect Answer
      D All of the above Correct Answer Incorrect Answer
      E None of the above Correct Answer Incorrect Answer

      Solution

      Quasi-equity refers to financial instruments that blend the features of both debt and equity. They are often unsecured, have flexible repayment schedules, and involve a higher level of risk compared to traditional debt, making them resemble equity in some aspects. Examples include: • Mezzanine debt: Typically unsecured and repaid based on company performance. • Preference shares with flexible repayment or dividend terms: Provide an equity-like risk capital without diluting ordinary shareholders’ control. • Subordinated (junior) debt: Ranks below other debts in case of liquidation, often structured with flexible terms. Thus, all of these qualify as quasi-equity instruments.

      Practice Next
      More Financial Management Questions

      Relevant for Exams:

      ask-question