The Two Principal Sources of Financing for Corporations Are

question 1

Multiple Choice

The two principal sources of financing for corporations are

• A) debt and accounts payable.
• B) debt and equity.
• C) common equity and preferred equity.
• D) cash and common equity.

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Definitions:

No-par Stock

Stock issued without a par value specified in the corporate charter or on the stock certificate.

Minimum Legal Capital

The least amount of capital that a company is required to maintain by law, to protect creditors from the company's liabilities.

Convertible Stock

Equity securities that can be converted into a predetermined number of common shares, at the option of the holder.

Callable Stock

A type of security that gives the issuer the right to buy back the shares at a predetermined price after a certain period.