Equity Financing is...

• A. Borrowing money with interest.
• B. Raising money by selling ownership shares in the business.
• C. Leasing assets to operate the business.
• D. Receiving government subsidies.

Answer: (B)

Equity financing means raising capital by selling ownership shares in the business to investors. This fits because you obtain funds without taking on a loan, and investors gain a stake in the company and a share of future profits or losses. Since no debt is created, there’s no obligation to repay with interest, which is why this isn’t debt financing. The other options describe different ways to fund a business: borrowing money with interest is debt financing; leasing assets is paying to use assets rather than funding ownership; and government subsidies are grants or subsidies, not ownership stakes. Equity financing can dilute ownership but provides funds for growth without required repayments.