Posted: February 17th, 2016

Financing a business

What are the two primary ways for a company to finance its business? Which would you choose if you were forming a corporation and trying to raise funds and why?

Your co-worker, Sam, tells you that he is going to purchase common stock in a new start-up company in hopes of seeing a big return on his investment. He tells you that he wouldn’t consider preferred stock because there is a very slim possibility of any type of large return. Explain why you agree or disagree.