Which best describes why a company issues stocks? A. To increase the company’s value
B. To ensure profits
C. To increase dividends
D. To raise capital
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Which best describes why a company issues stocks? A. To increase the company’s value
B. To ensure profits
C. To increase dividends
D. To raise capital
The correct answer is D. To raise capital.
When a company issues stocks, it is primarily seeking to raise capital. This capital can be used for various purposes, such as funding new projects, expanding operations, or reducing debt. While increasing the company’s value and providing dividends might be outcomes of raising capital, the direct reason for issuing stocks is to obtain the funds needed for growth and development.
The correct answer is D. To raise capital.
Companies issue stocks primarily to raise capital, which they can use for various purposes, such as expanding operations, investing in new projects, or paying off debt. By selling shares, the company receives funds from investors who become partial owners of the company. This process allows the company to grow and potentially increase its overall value in the long run. If you need further clarification or assistance, feel free to ask!