The raising of funds by selling stocks to the public is called?
ECONOMICS
JAMB 2001
The raising of funds by selling stocks to the public is called?
- A. equity financing
- B. stock financing
- C. debt financing
- D. loan financing
Correct Answer: A. equity financing
Explanation
Stocks are sometimes called equity because the buyer of the stock has part ownership of the company (that initially issued the stock). When a corporation sells stock it is selling an ownership interest in the corporation and raising funds for investment in plant and equipment (for example an initial public offering).
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