A new issue of securities increases both the amount of cash held by the company and the amount of stocks or bonds held by the public.

Question

Quizplus · Accepted Answer

When a company issues new securities, such as stocks or bonds, it receives cash from the public in exchange for these securities. This increases the amount of cash held by the company. At the same time, the public is holding more stocks or bonds, which increases the amount of securities held by the public.

A New Issue of Securities Increases Both the Amount of Cash