Final answer:
Firms can access financial resources through borrowing, issuing bonds, or issuing stock. Each option has its advantages and disadvantages.
Step-by-step explanation:
When a firm needs to access financial resources, it has several options such as borrowing from a bank, issuing bonds, or issuing stock. However, each option has its advantages and disadvantages.
Borrowing money from a bank or issuing bonds requires the firm to commit to scheduled interest payments, regardless of its income. On the other hand, it allows the firm to maintain control of its operations without being subject to shareholders.
Issuing stock involves selling ownership of the company to the public and becoming responsible to a board of directors and shareholders. Although it may provide the needed financial capital, it also means giving up some control over the company.