Corporations raise capital by selling debt which are bonds and notes, and equity which is stock claims against themselves - either directly to investors or indirectly to financial intermediaries, such as commercial banks. ... After a corporation goes public by conducting an initial public offering (IPO) of stock, it has the option of raising cash by selling additional stock in the future. ... In such a transaction, money flows from investors to firms, and the firms invest the money they receive to exploit investment opportunities. On the other side of the transaction, investors holding the fi...

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• Grade Level: Graduate