WHY DO COMPANIES ISSUE STOCK?

Businesses issue stock to raise money. They use this money to finance expansions, pay for equipment, and fund projects. Corporations issue stock when they may need additional capital to operate successfully.

The fancy term for issuing stock to raise money is equity financing.

The money received from investors who buy stocks is called equity capital.

In the world of securities, the word "equity" usually refers to stocks. The other method of raising money is debt financing, which involves selling bonds. That is the subject of other tutorials.

When companies make profits, they may reward their stockholders with cuts of their profits. These cuts are called dividends. Dividends are an incentive for investors to hold stocks.

Now that you know the why of buying stocks, you will need to know the where.