Question no 2944 SSC CGL Tier 1 Genral Awareness Questions and Answers Online Test 81

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1 .

The mains source of long-term credit for a business unit is

[ A ] sale of stocks and bonds to the public
[ B ] borrowing from banks
[ C ] loans from the Government
[ D ] deposits from the public and financial institutions

Answer : Option A

Explanation :

Companies issue securities called stocks and bonds to raise necessary capital which funds the company's daily operations and growth. Stock represents fractional ownership in the company. Investors may purchase preferred or common stock. Bonds represent loans of the company to l enders call ed bondhol ders. A company decides to sell stock when it needs long- term access to capital. Unlike bond loans, issuing stock to owners called stockholders doesn't require the company's repayment of investor principal.

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