Final answer:
Buying a company's stock is false, as this implies equity ownership, not a loan to the company. Stocks are issued to raise capital without the obligation of repayment, unlike debt financing. Venture capitalists, who invest significantly in companies, have different roles and rights than typical shareholders. The correct answer is option b false.
Step-by-step explanation:
When you buy a company's stock, you are not lending money to the company; instead, you are buying a portion of the company's equity. This statement is false. Owning stock means you are a shareholder and have a claim to a part of the company's assets and profits. Companies raise capital through the issuance of stocks, but they are under no obligation to pay back the investors for the shares purchased.
For a company looking to raise funds, issuing stock is one way to access financial capital. This is contrasted with debt financing, where borrowing from a bank or issuing bonds involves making regular interest payments. Companies that issue stock need not make these payments, though they might pay dividends at their discretion. Moreover, selling stock entails sharing ownership of the company with the public and answering to a board of directors and shareholders.
Venture capitalists are a different type of financier. They are private investors who usually take a significant stake in a company and have a hands-on role in its management, reducing the issues of asymmetric information that typical shareholders might face. Venture capitalists have more in-depth knowledge and control when compared to individual stock investors, which is why they can potentially influence the direction of the company.