Final answer:
Cash flows from financing activities include movements of cash related to a company's capital, such as debt and equity transactions. Buying and selling bonds or stocks of other firms is considered an investing activity, not a financing one. Companies raise capital via loans, bond issues, or selling stocks, each with distinct implications.
Step-by-step explanation:
Cash flows from financing activities typically reflect the movement of cash between a company and its owners and creditors, indicating how a company raises capital and pays it back to investors. Among the options provided, buying and selling bonds or stock of other firms does not fall under financing activities of the company in question. Instead, it is considered an investing activity.
Financing activities include cash payments on the principal of long-term debt, cash proceeds from a bank loan, and cash purchases of treasury stock, which are ways in which firms manage their own financial capital structures. When a firm decides how to access financial capital, it may opt for a bank loan, issue bonds, or issue stock. These avenues come with different advantages and disadvantages, such as maintaining control versus committing to scheduled payments or increasing responsibilities to a board and shareholders.