If money raised in the issue of new stocks and bonds by corporations is used effectively,

Question

Quizplus · Accepted Answer

If money raised in the issue of new stocks and bonds by corporations is used effectively, they generate the means of repayment. This means that the money raised through the issue of new stocks and bonds can be used to pay off debts or invest in growth opportunities, which ultimately enhances the company's ability to repay its obligations. This is a benefit to both the company and its shareholders. However, this does not exempt the company from meeting SEC requirements or prevent the stock from being "watered." Also, the income from these investments may be subject to double taxation depending on the specific circumstances.

If Money Raised in the Issue of New Stocks and Bonds