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Economics

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Economics
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Hill Murray School
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Part 1 and Part 2
Student’s Name
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Part 1: Essential Questions
What are Ways Businesses Can Raise Capital?
Businesses can raise capital in different ways. One of the ways is through reinvesting profits.
Consequently, businesses can opt to reinvest some of the generated profits by expanding
equipment, structures as well as research and development. Another way of raising capital is by
borrowing through banks or bonds. When a business has a record of making significant revenues
as well as profits, the firm can borrow from banks or through bonds while agreeing to pay
interest. Besides, businesses can also raise capital by selling stock. The stock of a company is
divided into shares which can be sold to interested potential shareholders to raise capital.
Why would someone invest in a bond?
Someone would choose to invest in a bond because it does not only yield income but it is also
considered to be less risky than other forms of investments such as stocks. Bonds are issued by
the government as well as corporations and municipalities who are considered as reliable when it
comes to returns on investment. There are other advantages of investing in bonds which range
from tax benefits to inflation protection.
What does a share of stock represent?
A share of stock represents partial ownership for a given business for the issued shares. Thus, a
share of stock can best be envisioned as equity ownership of a company. For instance, if
someone owns 50% of a company’s shares, it basically means that person owns half of the
organization.
What is the difference in risk, reward, and liquidity when it comes to buying stocks and/or
bonds?

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1 Part 1 and Part 2 Student’s Name Institutional Affiliation Course Instructor’s Name Date 2 Part 1: Essential Questions What are Ways Businesses Can Raise Capital? Businesses can raise capital in different ways. One of the ways is through reinvesting profits. Consequently, businesses can opt to reinvest some of the generated profits by expanding equipment, structures as well as research and development. Another way of raising capital is by borrowing through banks or bonds. When a business has a record of making significant revenues as well as profits, the firm can borrow from banks or through bonds while agreeing to pay interest. Besides, businesses can also raise capital by selling stock. The stock of a company is divided into shares which can be sold to interested potential shareholders to raise capital. Why would someone invest in a bond? Someone would choose to invest in a bond because it does not only yield income but it is also considered to be less risky than other forms of investments such as stocks. Bonds are issued by the government as well as corporations and municipalities who are considered as reliable when it comes to returns on investment. There are other advantages of investing in bonds which range from tax benefits to inflation protection. What does a share of stock represent? A share of stock represents partial ownership for a given business for the issued shares. Thus, a share of stock can best be envisioned as equity ownership of a company. For in ...
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