Why do stock companies prefer equity financing in raising money for their operations than debt financing? Distinguish the two.

Q: Why might a large corporation want to raise long-term capital through a borrowing money from…

A: Raising money from financial institutions increases the likelihood of finding investors who share…

Q: How to use Return on Equity ratio to determaine whether a company needs to issue stocks or bonds to…

A: Return on equity is a ratio which is used by companies to measure financial performance and helps…

Q: In what ways is preferred stock like long-term debt? In what ways is it like equity?

A: Preferred stocks are issued to raise capital for the firm. Other forms of fund raising methods are…

Q: What factors might lead a company to gain additional fundsthrough debt financing rather than through…

A: Company mainly has two type of Sources of Fund. 1. Equity Fund  2. Debt Fund.

Q: What information do investors and creditors need when determining which companies will receive…

A: Accounting: Accounting is a system, or a process of collecting and organizing economic transactions,…

Q: Why would a company invest in debt or equity securities?

A: Debt securities: The financial instruments which are bought by investors, or corporations, or mutual…

Q: Compare between debt and equity financing perspectives for a firm.

A: Firms often choose between the different sources of capital for financing needs to fund the…

Q: How does a company utilize stocks and bonds in financing growth? Identify the major sources of…

A: Financial capital is the money used to fund businesses and some public projects. It is made…

Q: Which of the following is a cost associated with an IPO? Interest expenses Out-of-pocket expenses…

A: Company means the form of business where management is separately from owner and have perpetual…

Q: In terms of financing costs and profits, when should a financial manager of a firm: (a) issue new…

A: Honor Code:-- "Hi there, thanks for posting the questions. But as per our Q&A guidelines, we…

Q: The application of financial theory to new venturing has uniquely defining characteristics that…

A: Discussing regarding the application of financial theory.

Q: Why mix of equity and debt finance being preferred in financing businesses?

A: The financial structure composed of debt and equity capital is frequently preferred in the…

Q: Firms raise capital from investors by issuing shares in the primary markets. Does this imply that…

A: in the secondary market, securities that have already been issued will be bought and sold. The…

Q: Discuss the various timing risks a corporate CFO risks when raising funds via bonds or common stock…

A: Bond is referred as the fixed income instrument, which helps in representing the loans that are made…

Q: Which of the following is not a money market instrument? a. Equity Shares b. Treasury Bills c.…

A: Money market instrument means those instrument which are issued in money market and generally for…

Q: Which of the following can be categorized as Short term sources of finance ?i Equity Sharesii Trade…

A: Short term sources are finances are those sources of finance for the business which is available for…

Q: One of the fundamental questions of corporate finance is how a firm should leverage its capital…

A: The capital structure of a firm relates to the exact proportion of the debt and the equity utilized…

Q: What are some reasons that a company might choose common stock as means of financing their business…

A: Common Stock Common stock represents the ownership of a corporation by its stockholders. It allows…

Q: Why do firms generally prefer to borrow funds to obtain long-term financing rather than issue shares…

A: When a firm or company needs capital to grow or start a new project then it uses debt or equity or…

Q: If you are a company owner, which one you choose debt financing, equity financing or a combination…

A: Finance is very important to run a business. It is very necessary to have finance to conduct day to…

Q: What are the charateristics of Debt financing and Equity fianancing? If a company wanted to maximize…

A: Answer: Usually for a company there are various sources available to raise funding. Such a issuing…

Q: What are pros and cons of raising money with debt? What is an alternative and why might some…

A: When a corporation generates funds by issuing debt instruments, this is known as debt financing.…

Q: Under which condition an external equity financing can be advantageous? Group of answer choices…

A: Raising funds via external equity means raising funds via equity share capital to finance the assets…

Q: For purposes of measuring a firm’s leverage, should preferred stock be classified as debt orequity?…

A: We cannot categorize preferred stock as entirely debt or equity. It is a mixture and is alike bonds…

Q: From the firm’s perspective, how are dividends different from interest payments?

A: Even though interest and dividend are two distinct ideas, both are critical components of a…

Q: (1) What factors might lead a company to gainadditional funds through debt financing rather…

A: Financial Activities: Financial exercises are exercises that organizations embrace to assist with…

Q: Which of the following is an example of an action done by a firm to conduct financial structuring?…

A: A corporation's financial structure refers to the mix of debt and equity used to support its…

Q: Explain why a company might issue convertible securities instead of straightforward debt or equity.…

A: Convertible security is an instrument , usually a bond or a preferred stock, that can be converted…

Q: Financial risk refers to the: Multiple Choice   possibility that interest rates will increase.…

A: Financial risk refers to the inability of the firms to meet its debt obligations. In the case of…

Q: articipate in the ownership of the firm. (b) Investors in debt are paid interest. (c) Debt is more…

A: Debt capital consists of the securities that represent lenders or financial creditors to the firm.…

Q: Which of the following actions would improve a firm's liquidity?   a.   Selling shares and…

A: Liquidity is referred to as an ease of the conversion of the assets or security, which can ready…

Q: Why is a financial structure of a capitalization structure (a mix of equity and debt finance) being…

A: Answer: The financial structure of both debt and equity capital is often favored in the company…

Q: Explain briefly how the stock markets work and assess their usefulness to business as a source of…

A: A stock market is  the place where the buyer and sellers gather together to buy and sell the…

Q: Why do companies use so many different types ofinstruments to raise capital? Why not just use…

A: Finance is the life-blood of every organization. Every organization needs finance for its day-to-day…