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unit-6-sources-of-long-term-finance-and-underwriting

Unit-6 Sources Of Long-Term Finance And Underwriting

In this unit we shall examine in detail the nature and importance of long-term finance.

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Mention the sources from which companies may raise long-term finance. Distinguish between investment companies and investment trusts as sources of long-term finance.

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Learning Pundits Content Team

Written on Apr 15, 2019 6:19:40 PM

Generally speaking, long-term finance may be raised by companies from , one or more of the following sources:

  1. Capital market which consists of individual investors, financial institutions and investment companies.
  2. Special financial institutions consisting of development banks and institutional ' investors.' 
  3. Leasing companies
  4. Foreign sources
  5. Retained profits

Investment Institutions: Financial institutions which promote the saving habits of people with an assurance that the savings entrusted to them would be invested in profitable channels and help in earning adequate return for the saving public.

Investment Trust: Investment company which raises funds from the public for investment in profitable securities against which its own shares (or units) are issued to the public which can be encashed at any time at their underlying asset value.