ECONOMICS
FINANCIAL MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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To increase its’ customer base.
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To raise money.
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To stop the government from regulating it.
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To show customers that it’s successful.
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Detailed explanation-1: -Companies issue shares to raise money from investors who tend to invest their money. This money is then used by companies for the development and growth of their businesses.
Detailed explanation-2: -A company issues stock to raise capital from investors for new projects or to expand its business operations.
Detailed explanation-3: -Why Do Companies Issue Stock? Corporations issue stock to raise money for growth and expansion. To raise money, corporations will issue stock by selling off a percentage of profits in a company.
Detailed explanation-4: -Benefits for Issuing Companies For businesses, issuing common shares is an important way to raise capital to fund expansion without incurring too much debt. While this dilutes the ownership of the company, unlike debt funding, shareholder investment need not be repaid at a later date.
Detailed explanation-5: -Companies raise money because they might have a short-term need to pay bills or need funds for a long-term project that promotes growth. By selling shares, a business effectively sells ownership in its company in return for cash. Equity financing comes from a variety of sources.