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.
