Final answer:
Issuing stock does not necessarily cost the company money only if options are exercised. It allows a company to raise capital for growth without the obligation of repaying money as with loans but incurs other costs and necessitates reporting and regulatory compliance. Venture capitalists offer another funding option with closer management oversight.
Step-by-step explanation:
It's false to say that issuing stock options would only cost the company money if they were exercised. There are different ways a company can acquire financial capital, such as borrowing from banks, issuing bonds, or issuing stock. For small and growing companies, accessing financial capital allows for company expansion without the requirement to repay the money, unlike debt financing where interest payments are mandatory.
When a company issues stock, it dilutes ownership among the public, giving new shareholders a stake in the company. This process can increase a company's visibility, but it requires the help of investment bankers and lawyers, involves significant costs, and entails meeting reporting obligations to regulators and shareholders. However, issuing stock does not oblige the company to make payouts unless it opts for dividend distribution.
Venture capitalists can provide an alternative source of capital. They often hold large portions of the company and can closely monitor its management, offering a layer of insight and oversight that may not be available to average shareholders. Ultimately, issuing stock provides a path for growth but comes with its set of trade-offs, including a loss of control and added responsibilities to a broader shareholder base.