JAMB - Economics (2001 - No. 30)
The raising of funds by selling stocks to the public is called?
equity financing
stock financing
debt financing
loan financing
Paskaidrojums
Stocks are sometimes called equity because the buyer of the stock has part ownership of the company (that initially issued the stock). When a corporation sells stock it is selling an ownership interest in the corporation and raising funds for investment in plant and equipment (for example an initial public offering).