Final answer:
A firm must ensure it has necessary financial capital before selling securities. Options include borrowing, issuing bonds, or issuing stock. Selling stock involves selling ownership to the public.
Step-by-step explanation:
A firm must first ensure that it has the necessary financial capital before deciding to sell securities. This can be done by accessing financial capital through borrowing from a bank, issuing bonds, or issuing stock.
While issuing stock can provide the firm with funds to repay early-stage investors and expand its operations, it also involves selling off ownership of the company to the public and becoming responsible to a board of directors and shareholders.
By carefully considering the pros and cons of each option, a firm can make an informed decision about how to access the necessary financial capital.