Question

Define the 4 terms and give examples of how each term is relevant.

1.Stock

2.Interest payment

3.Private corporation

4.Interest rate

thank you

Answer 1

1. Stock is a share in the capital of the company. It is a part of a company which can be purchased by individual investors.

2. Interest payment it represents payment for the use of funds. It is a cost of using the funds. It is an important element it in determining the source of finance.

3. Private Corporation is a corporation whose shares are not traded in the stock market. This is an important form of organisation and useful for those who do not want to trade their shares in the stock market and closely hold control over the business.

4. Interest rate represents the cost of debt Finance. It is useful in in deciding which source should be used for borrowing funds. Lower the interest rate lower will be the cost of funds and Vice versa.