Comparing debt and equity funding
A fictional startup compares a bank loan with selling an ownership share to an investor. Which distinction is most accurate?
A
Both sources of funding guarantee that the business will be profitable.
B
Debt generally creates a repayment obligation, while equity gives the investor an ownership interest.
C
Selling equity always requires the same fixed repayments as a loan.
D
A bank loan automatically gives the bank all ownership of the business.
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