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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
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Correct Answer: Option A
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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