A public limited company can raise long term loans through
A public limited company can raise long term loans through
- A) The capital market
- B) The money market
- C) Bank overdraft
- D) Discount houses
Correct Answer: A) The capital market
Explanation
This question is asking how a public limited company can raise long term loans. The options are: A) The capital market, B) The money market, C) Bank overdraft, and D) Discount houses. The correct answer is A, The capital market.A public limited company is a type of company that offers shares to the public and has limited liability. Long term loans are loans that have a repayment period of more than one year. The capital market is where long term loans can be raised by a public limited company.
The capital market is a market where long-term securities such as bonds and stocks are bought and sold. It is a market for raising long-term funds, and it includes institutions such as stock exchanges, investment banks, and mutual funds. Companies can issue bonds or stocks in the capital market to raise funds for long-term projects or expansion plans.
In contrast, the money market is a market for short-term borrowing and lending, where securities such as treasury bills and commercial papers are traded. Bank overdraft is a short-term borrowing facility that allows a company to withdraw more money than it has in its account, while discount houses are institutions that provide short-term loans to businesses at a discount.
In summary, a public limited company can raise long term loans through the capital market, which is a market for long-term securities such as bonds and stocks. To learn more about this, please read the relevant sections of the recommended textbooks.