Question

How do firms raise capital?

1) By issuing stock
2) By taking loans
3) By selling assets
4) By attracting investors

Answer 1

Firms can raise capital by issuing stock, taking loans, selling assets, or attracting investors.

Step-by-step explanation:

Firms can raise capital in several ways:

1. By issuing stock: This involves selling ownership shares of the company to the public. Investors who purchase the stock become shareholders and have a claim on the company's profits.
2. By taking loans: Firms can borrow money from banks or issue bonds. However, this comes with the obligation to make scheduled interest payments.
3. By selling assets: Companies can sell off assets, such as property or equipment, to generate capital for their projects.
4. By attracting investors: Early-stage firms can seek funding from investors who are willing to provide capital in exchange for a potential return.