Question

If the business grows, Marcus may need to consider his options for equity financing. His options for acquiring equity financing are limited to:

a) Shares, Bonds, Debentures
b) Bank Loans, Venture Capital, IPO
c) Retained Earnings, Angel Investors, Crowd Funding
d) Government Grants, Microloans, Angel Investors

Answer 1

Shares, Bonds, and Debentures are options for acquiring equity financing.

Step-by-step explanation:

If the business grows, Marcus may need to consider his options for equity financing. His options for acquiring equity financing are limited to:

1. Shares - When a company sells shares, it is essentially selling ownership stakes to investors. By purchasing shares, investors become partial owners of the company.
2. Bonds - A bond is a loan made by an investor to a borrower, typically a company or government. The issuer of the bond agrees to repay the principal amount plus interest to the bondholder.
3. Debentures - Debentures are similar to bonds, but they are not secured by specific assets. Instead, they are backed by the general creditworthiness and reputation of the issuer.

Answer 2

Marcus's options for acquiring equity financing include Retained Earnings, Angel Investors, and Crowd Funding. These options offer different methods of raising funds without the obligation of scheduled repayments, unlike debt financing. Marcus needs to evaluate the impact on company control and financial risk when choosing the best equity financing strategy.

Step-by-step explanation:

If the business grows, Marcus may need to consider his options for equity financing. Among the options presented, the correct choices for acquiring equity financing are limited to 'c' Retained Earnings, Angel Investors, Crowd Funding. Each of these options brings a different approach to raising funds.

Equity financing, in essence, involves raising capital through the sale of company shares. This could be done through various means, such as:

• Retained Earnings: This is the income that a company has earned and not distributed as dividends to its shareholders. It's essentially internal equity financing, where profits are reinvested back into the business.
• Angel Investors: These are affluent individuals who provide capital for a business start-up, usually in exchange for convertible debt or ownership equity.
• Crowd Funding: A way of raising equity by asking a large number of people to each give a small amount of money, typically facilitated through online platforms.

It's important to note that issuing stock might mean surrendering a degree of control, as shareholders will have a voice in company decisions. However, this does not imply scheduled payments like debt financing. Venture capitalists, mentioned in option 'b', could be considered a form of equity financing as well. However, bonds and bank loans are generally considered forms of debt financing.

Therefore, Marcus will need to weigh the pros and cons of each option to determine the best strategy for his business expansion, considering factors like control over the company, the need for scheduled payments, and the level of risk involved.