Question

How does a company utilize stocks and bonds in financing growth? Identify the major sources of external financing for companies
No copy and paste pls. Thank you

Answer 1

A company utilizes stocks and bonds in financing growth by using stocks and bonds as means to raise funding and resources for the company. These funds and resources can then be used to finance the company’s investments in new projects and to finance its operations. While stocks represent the equity component of capital bonds represent debt component of capita. Thus through issuing stocks and bonds a company is able to get necessary capital at its disposal that it needs to invest in research and development, to invest in development of new products, and then to market those new products to the target consumers.

Major sources of external financing for companies are:

· Equity capital

· Preferred stock

· Debentures

· Term loans

· Bank overdraft

· Trade credit etc.