Final answer:
A firm can fund an expansion of its operations by issuing stock, which allows the firm to access financial capital without the need to repay the money.
Step-by-step explanation:
The firm can fund an expansion of its operations by issuing stock.
When a firm issues stock, it sells ownership of the company to the public and becomes responsible to a board of directors and shareholders. This allows the firm to access large amounts of financial capital for expansion without the need to repay the money. Issuing stock also increases the firm's visibility in the financial markets.
However, issuing stock is an expensive process that requires the expertise of investment bankers and attorneys, as well as compliance with reporting requirements to shareholders and government agencies such as the federal Securities and Exchange Commission (SEC).