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

Issuing debentures means raising long-term funds by borrowing from the public or investors at a fixed interest rate. This activity is a classic example of a financing decision, which involves deciding the best mix of debt and equity capital to fund the company's operations and growth while minimizing cost and financial risk.