One way that investors contribute capital to the firm is by:

Question

Quizplus · Accepted Answer

By plowing back their profits into retained earnings, investors are essentially contributing capital to the firm without having to physically invest more money. This can then be used by the company for things like expansion, R&D or debt reduction. Paying less than par value for the stock and letting warrants expire unexercised do not add to the firm's capital, while increasing the amount of treasury stock actually reduces the amount of outstanding shares and does not contribute new capital to the firm.

One Way That Investors Contribute Capital to the Firm Is