USA HISTORY

THE VIRGINIA DYNASTY 1801 1825

AMERICAN INDUSTRIALIZATION FACTORY SYSTEM AND MARKET REVOLUTION

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Issuing stock allows a corporation to raise large amounts of money for big projects while
A
Cutting prices to increase sales.
B
decreasing fixed costs.
C
lending money to investors.
D
spreading out the financial risk.
Explanation: 

Detailed explanation-1: -Entrepreneurs-people who risk their capital to organize and run businesses-were attracted by the prospect of making money in manufacturing and transportation.

Detailed explanation-2: -Which statements represent advantages to a company issuing stock? There is no legal obligation to pay stock dividends. The company incurs no debt, so it may appear financially stronger. The stock price never has to be repaid to stockholders, since they become owners in the company.

Detailed explanation-3: -Perhaps the most successful investment banker was J. P. Morgan. He specialized in helping companies sell large blocks of stock to investment bankers at a discount. The bankers would then sell the stock for a profit.

Detailed explanation-4: -Large cap stock is the stock of a corporation that has issued a large number of shares of stock and has a large amount of capitalization. Small cap stock is a stock issued by a company with a capitalizaiton of $150 million or less. Penny stock typically sells for less than $1 a share.

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