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What are the main differences between corporate debt and
equity? Why do some firms try to issue equity in the guise
of debt?
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Answer Posted / archana
Interest payment is mandatory on debt each year whereas
dividend is not madatory to be declared and paid every
year. Also equity is long term capital and payable by
Company on liquidation whereas debt is to be paid on
specific time as prescribed in terms & conditions at the
time of issue. Therefore some firms try to issue equity in
the guise of debt.
| Is This Answer Correct ? | 7 Yes | 1 No |
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