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4 October, 23:18

A business owner decides to take out a bank loan instead of issuing stock in order to raise funds for the business. Why might the owner have made that decision?

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  1. 5 October, 02:40
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    Answer: to keep control

    Explanation: In simple words, stock is usually used for equity shares of a company which is the part of ownership right of a company. Equity shares are issued by the companies, generally operating at a large scale, to raise funds from the market and in return they provide their investors dividends.

    As equity holders are owners of the company they get to have all the rights in operating the company and decision making. In the given case, the owner have taken a loan from the bank, thus, bank is creditor for the firm but do not have nay control over operations.

    Although the loan to bank is an obligation which must be repaid.
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