Question

"The Finance Manager of the company has suggested issue of debentures at an estimated cost of 8 %". The above statement conveys _________ type of financial decision.

• A. Working capital decision
• B. Investment decision
• C. Financing decision
• D. Dividend decision

Hint:

Financing decisions focus on raising funds—through equity, debt (like debentures), or hybrids—to support business needs cost-effectively.

Answer 1

The Correct Option is C

The issuance of debentures constitutes the procurement of long-term capital through public or investor borrowing at a predetermined interest rate. This action exemplifies a financing decision, which entails determining the optimal proportion of debt and equity for funding a company's operations and expansion, while simultaneously reducing expenditure and financial exposure.