GK
BUSINESS ECONOMICS
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
To increase its’ customer base.
|
|
|
To raise money.
|
|
|
To stop the government from regulating it.
|
|
|
To show customers that it’s successful.
|
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: -The primary reason behind the issuance of common stocks is to raise capital. Issuance of more common stocks in the market tends to dilute the holding power of existing stockholders. This is why company owners are often wary and tend to weigh the pros and cons of share issuance before making the final call.
Detailed explanation-3: -Companies issue new stocks or bonds to raise capital for growth and expansion. A company has two primary ways to raise capital: one is through debt – such as issuing bonds, and the other is through equity – issuing stocks.