A firm can raise financial capital without incurring debt by
A)issuing bonds.
B)investing in new capital equipment.
C)making extra dividend payments.
D)issuing new shares.
E)increasing its bank loans.

Question

Quizplus · Accepted Answer

Issuing new shares is a way in which a firm can raise financial capital without incurring debt. By issuing new shares, the firm is selling ownership in the company to new investors, which in turn provides the firm with the necessary capital to finance its operations or investments. Unlike issuing bonds or increasing bank loans, issuing new shares do not increase the firm's debt burden, as shareholders have an equity stake in the company rather than being creditors. Investing in new capital equipment or making extra dividend payments are not ways in which a firm can raise financial capital.

A Firm Can Raise Financial Capital Without Incurring Debt by