📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!


    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
    ask-question