Question

41) Which of the following is an example of equity (as opposed to debt) finance? (2pts) Juanita buys 100 shares of newly-issued stock in an IPO by a corporation. Mary buys a $10,000 municipal bond issued by the state of Missouri. Fred borrows $10,000 from his credit union to finance the purchase of a new car All the above. Nono of the above.

Answer 1

Answer: Junaita buys 100 shares of newly-issued stock in an IPO by a corporation.

When a company raises money by selling shares or stocks of the company to public and other institutional investors,it is called equity finance. When a company raises money by selling debt instruments or fixed income certificates like bonds, notes, bills to public or institutional investors, it is called debt financing.  

When Junaita buys 100 shares of newly-issued stock in an IPO by a corporation, it is an example of equity.

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