Part 1Common stock is a vehicle for selling ownership and another way to raise money for operations, expansion, or other business needs. Part 1
True False

Question

Part 1Common stock is a vehicle for selling ownership and another way to raise money for​ operations, expansion, or other business needs. Part 1
True False

BlackTom AI · Accepted Answer

The question presents a statement about common stock: 'Common stock is a vehicle for selling ownership and another way to raise money for operations, expansion, or other business needs.'
Option 1: True. This aligns with fundamental corporate finance concepts. Issuing common stock transfers partial ownership to investors and raises capital that a company can use for ongoing operations, growth initiatives, debt reduction, or other corporate purposes. It reflects two key ideas: ownership rights and financing via equity, not debt, which is why it is considered a method to raise money while diluting ownership.
Option 2: False. This would be incorrect because common stock indeed represents ownership in the company and is a primary means of raising capital through equity issuance. Saying it does not provide a path to funds contradicts the standard function of equity financing and ignores how issuing shares can fund operations or expansion without incurring debt.
Additional nuance: While issuing common stock does dilute existing ownership, it Avoids interest obligations and cash fixed commitments typical of debt financing, which is often a strategic consideration in capital structure decisions. Therefore, recognizing common stock as both an ownership stake and a fundraising mechanism correctly reflects its role in corporate finance.

Test:FINAL

Part 1Common stock is a vehicle for selling ownership and another way to raise money for operations, expansion, or other business needs. Part 1 True False

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Test:FINAL

Part 1Common stock is a vehicle for selling ownership and another way to raise money for​ operations, expansion, or other business needs. Part 1 True False

查看解析

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类似问题

If you believe that a firm will grow rapidly in the future, you should buy its

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Which one of the following types of stock is defined by the fact that it receives no preferential treatment in respect to either dividends or bankruptcy proceedings?

更多留学生实用工具

希望你的学习变得更简单

Part 1Common stock is a vehicle for selling ownership and another way to raise money for operations, expansion, or other business needs. Part 1 True False