The raising of funds by selling stocks to the public is called?

A. equity financing
B. stock financing
C. debt financing
D. loan financing

Correct Answer:

Option A – equity financing

Explanation

Stocks are sometimes called equity because the buyer of the stock has part ownership of the company (that initially issued the stock). When a corporation sells stock it is selling an ownership interest in the corporation and raising funds for investment in plant and equipment (for example an initial public offering).