Question

Each of the following is a benefit of issuing stock to grow a business except:

A) Access to more funds than she could get from her own savings.
B) Access to money that she does not have to repay, unlike a loan.
C) The possibility of rapid growth.
D) Giving up shares of ownership.

Answer 1

D. giving up shares of ownership

Step-by-step explanation:

Selling stocks is mainly done by companies in order to gather enough capital injection to expand their operation. Giving up ownership to others actually give them a lot of disadvantages. Such as:

- They have to distribute their profit to the stockholders according to how much ownership they own.

- The action of the management team will be limited since stockholders who have large enough ownership tend to be able to influence the company's decision making.

- Investors of high ownership can also influence the selection of the Chief Executives in the company. The current holder of these positions could easily be replaced f they do not perform well.