UNIT -1-Medium-term sources of finance.pptx

Medium term is a holding period or investment horizon that is intermediate in nature. In the fixed-income market, bonds that have a maturity period of 2 to 10 years are considered to be medium-term bonds.
1. Some examples of medium-term sources of finance are:
*Loans from commercial banks
financial institutions or government
*Lease financing, which is a form of renting an asset
*Debenture or bonds, which are fixed-interest securities issued by a company
*Preference capital or preference shares, which are shares that have a fixed dividend and priority over ordinary shares
*Hire purchase finance, which is a form of buying an asset in instalments

1. Medium-term sources of finance  meant by medium term finance Medium term is a holding period or investment horizon that is intermediate in nature. In the fixed-income market, bonds that have a maturity period of 2 to 10 years are considered to be medium-term bonds.

2. Some examples of medium-term sources of finance are : Loans from commercial banks financial institutions or government Lease financing, which is a form of renting an asset Debenture or bonds, which are fixed-interest securities issued by a company Preference capital or preference shares, which are shares that have a fixed dividend and priority over ordinary shares Hire purchase finance, which is a form of buying an asset in instalments

3. Advantages of medium term sources of finance Regular repayments with a straightforward repayment schedule. Fixed interest rates. Improved credit score for the business owner. Higher loan amounts. Less risky for lenders.

4. Disadvantages of medium term sources of finance More difficult to obtain than short-term finance Longer approval process due to extra checks on the borrower Higher fees and penalties for some forms of medium-term finance Accrued interest Longer application process than short-term loans

5. Internal medium term sources of finance These are funds that come from within the organization itself. some common internal sources: Retained Profits : Reduction or Control of Working Capital :  Sale of Assets :

6. External sources of finance External sources of finance refer to funds obtained from outside the business, such as through, Loans, Issuing bonds, Seeking investment from external parties . These sources provide businesses with additional capital to fund operations, expansion, or investment in new projects.