Read the following Case Study and answer, question

Aryan is a CEO of RS Infotech Ltd., which is a company working in the technology sector for the last 55 years. The company is doing very well in this sector and now has a growth plan of entering into cosmetics market.

Keeping in view the changing tastes and preferences Of customers, it is planning to enter organic products market.

The company targets to achieve 20% of market share in the first 2 years of its entry.

For financial issues, Aryan consulted his chief finance officer, Raj and found that it requires 50 crores of additional capital for setting up a separate cosmetics division.

The Company plans to arrange this money by issuing equity shares in the market but it lacks sufficient cash to bear the floatation cost and hence planned to approach the financial market for the same.

When the company approaches Money Market to meet the requirement of floatation cost of equity shares, the process is known as ____________.

Bridge Financing

The correct answer is option (3) : Bridge Financing

(3) Bridge Financing.

Bridge financing is a short-term financing option that helps businesses to meet their immediate financial requirements while they wait for long-term financing or a more permanent financial solution.

In this case, RS Infotech plans to approach the financial market to cover the flotation cost of issuing equity shares. This short-term funding is often referred to as bridge financing, as it serves as a temporary solution to bridge the gap between the immediate financial need and the long-term financial arrangement.