Principles of Microeconomics / Unit 15 MIC 1411 short lesson, about 20 seconds
How Firms Raise Financial Capital
Captions available
The idea
Four sources: early investors, reinvested profits, borrowing by bank loan or bond, and stock. A firm is paid for stock only when it issues it; later trades pass between investors. Shareholders earn dividends and capital gains and elect the board.
In practice
A bond: an amount borrowed, an interest rate, a repayment date.
Where people slip
A share bought from another investor pays the firm nothing.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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