ECONOMICS
SAVING AND INVESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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To grow equity interests that encourage diversification
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To raise money that can be used to growth the company
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To increase the influence of the current owners of the company
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To exempt the company from paying taxes
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Detailed explanation-1: -Increasing Market Visibility: Companies may issue shares to raise capital and increase their visibility in the market. By going public through an IPO, companies can gain a listing on a stock exchange and increase their visibility among investors and analysts.
Detailed explanation-2: -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-3: -They may raise funds to finance their operations or new investments by raising capital through selling stock or issuing bonds. Those who buy the stock become the firm’s owners, or shareholders. Stock represents firm ownership; that is, a person who owns 100% of a company’s stock, by definition, owns the entire company.
Detailed explanation-4: -Equity financing is the process of raising capital through the sale of shares. 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.
Detailed explanation-5: -Companies sell shares in their business to raise money. They then use that money for various initiatives: A company might use money raised from a stock offering to fund new products or product lines, to invest in growth, to expand their operations or to pay off debt.