Question

Suppose Larry would like to invest $6,000 of his savings. One way of investing is to purchase stock or bonds from a private company. Suppose NanoSpeck, a biotechnology firm, is selling bonds to raise money for a new lab—a practice known as __________finance. Buying a bond issued by NanoSpeck would give Larry_________ the firm. In the event that NanoSpeck runs into financial difficulty, ____________will be paid first.

Answer 1

The answers are:

1. equity
2. claim to partial ownership
3. bondholders

Step-by-step explanation:

Equity financing: refers to the process of raising money by selling company's shares or stock.

Claim to partial ownership: when an individual or business buys a share from another company, it becomes a partial owner.

Bondholders: refers to individuals or companies that own bonds issued by a private company or by a government entity.