Cryptocurrency Q&A
Why is debt financing riskier?
Why is debt financing riskier?
GyeongjuGloryDays
Sun Aug 11 2024
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7 answers
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Why is debt financing often considered a riskier option compared to other forms of financing? What are the key factors that contribute to this riskiness, and how do they impact the borrower and lender? Is there a way to mitigate these risks and make debt financing a more viable option for certain businesses or individuals?
7 answers
PhoenixRising
Tue Aug 13 2024
Borrowers, on the other hand, must accept these higher rates as a necessary cost of accessing debt financing.
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Eleonora
Tue Aug 13 2024
The correlation between interest rates and risk is a fundamental concept in finance. As interest rates increase, so does the level of risk associated with a given investment or loan.
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Nicola
Tue Aug 13 2024
Beyond the interest payments themselves, debt financing often comes with additional requirements for borrowers.
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Margherita
Tue Aug 13 2024
This is because higher interest rates reflect a greater likelihood of default, which can occur when borrowers are unable to repay their debts.
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GeishaWhisper
Tue Aug 13 2024
These may include adhering to specific financial performance metrics or maintaining a certain level of liquidity.
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