Match each source or type of business capital on the left with its corresponding defining feature or operational characteristic on the right.
- DebentureA long-term loan instrument issued under seal that pays a fixed rate of interest regardless of profitability.
- Bank OverdraftA short-term credit arrangement allowing a business to draw funds beyond its account balance up to an agreed limit.
- Trade CreditA short-term financing arrangement where suppliers allow a buyer to defer payment for goods supplied.
- Venture CapitalEquity funding provided by private investors or specialized firms to early-stage, high-risk startup enterprises.
Answer
Debenture matches with the long-term fixed-interest loan instrument; Bank Overdraft matches with drawing funds beyond current account balance; Trade Credit matches with deferred payment terms offered by suppliers; Venture Capital matches with risk equity capital invested in high-growth startups.
Each type or source of capital is matched based on its tenure and financing mechanism: Debenture corresponds to long-term loan capital with fixed interest, Bank Overdraft to short-term bank balance extensions, Trade Credit to supplier deferred payment terms, and Venture Capital to startup risk equity.
Step-by-Step Solution
Key Concept
Classification of Business Capital by Duration, Source, and Risk