An investor purchases the right to receive a specified fixed stream of income from the corporation when he purchases a share of stock.

Question

Quizplus · Accepted Answer

An equity loan is made when a corporation sells stock to investors. The money the corporation receives in return for its stock can be used to purchase plants and equipment, fund R&D projects, pay wages, and so on. A share of stock gives its holder a claim to a firm's profit stream.

An Investor Purchases the Right to Receive a Specified Fixed