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

Question

Quizplus · Accepted Answer

Issuing new shares allows a firm to raise financial capital without incurring debt as it does not involve borrowing money that the company must pay back with interest. Instead, the firm is selling ownership in the company to investors in exchange for capital. This approach can be less risky than issuing bonds or taking out bank loans as there are no fixed payments that must be made regardless of the company's performance. Extra dividend payments do not raise financial capital, but rather distribute existing capital to shareholders. Investing in new capital equipment also does not raise financial capital, but rather involves using existing capital to purchase assets for the company.

A Firm Can Raise Financial Capital Without Incurring Debt by