Author Question: Define the two primary sources of equity financing.[br][br][b][color=#347235]Question ... (Read 68 times)

khang · **on:** Jul 14, 2018

Define the two primary sources of equity financing.

Question 2

A horizontal merger is a merger between firms in completely unrelated industries.

Indicate whether the statement is true or false

jamesnevil303 · **Reply #1 on:** Jul 14, 2018

Answer to Question 1

The two primary sources of equity financing are:
Direct contributions by owners: Unincorporated businesses can raise equity capital by having individual owners directly contribute cash or other resources. Corporations can raise equity capital by issuing new shares of stock and selling them to existing stockholders or to new investors.

Retained earnings: Retained earnings represent that part of net income (profit) that a firm reinvests in its operations. Retained earnings are classified as equity financing because a firm's profits legally belong to its owners.

Answer to Question 2

False