Question

In: Economics

1 Which of the following is true about a public company? select two answers .s It...

1 Which of the following is true about a public company?

select two answers .s

  • It is owned by the people who run it on a day-to-day basis.

  • It is a firm that has sold its stock by making it available to be bought and sold by outside investors.

  • It is owned by shareholders.

  • It is the same as a partnership.

  • 2 What are the benefits of issuing stock for a small and growing firm?

    it increases its visibility in the financial markets

    it allows it access to large amounts of financial capital for expansion

    it wouldn't have to worry about repaying the money obtained through selling stock

    all of the above

  • Which of the following describe situations where a firm may not be able to use its own profits as a source of financial capital?

    select two answeres

  • A large company as been operating for about fifty years and has seen a steady growth in profits each year.

  • A new technology company is just starting and still developing its product.

  • A company has been suffering low profits for the past few years and even lost money in the most recent fiscal quarter.

  • A large, established firm saw lower profits this year compared to previous years. However, the company is still financially sound and is not currently interested in any major expansion.

Solutions

Expert Solution

1. Following statement is true about public company -

a. It is a firm that has sold its stock by making it available to be bought and sold by outside investors.

b. It is owned by shareholders.

2. Benefits of issuing stock for a small and growing firm is -

a. it allows it access to large amounts of financial capital for expansion

3. Situations where a firm may not be able to use its own profits as a source of financial capital are -

a. A new technology company is just starting and still developing its product.

b. A company has been suffering low profits for the past few years and even lost money in the most recent fiscal quarter.


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