Final answer:
Households can invest in Stewart's company by buying stock and bonds, providing the necessary funds to upgrade mining machinery. The purchase of stocks makes them part-owners, while bonds are loans to the company.
Step-by-step explanation:
Individual households can provide financial capital to Stewart’s rare-earth metals mining corporation through investing in stock and bonds issued by the company. When households purchase stocks, they become partial owners of the company, which can use the raised capital for expansion and upgrading machinery without the obligation to repay the money, but with the potential to pay out dividends if the company is profitable. Alternatively, investing in bonds is essentially lending money to the company, which it must pay back with interest, but this method provides a scheduled return on the investment.
Moreover, by issuing stock, the company can avoid the cash strain that comes with interest payments on bonds or loans. It’s important to note that while issuing stocks and bonds allows a firm to raise capital, it also comes with obligations to investors, such as dividend payments for stocks or interest for bonds, and requires adherence to reporting requirements to shareholders and governmental agencies like the Securities and Exchange Commission (SEC).