Of all the ways to raise financial capital, issuing and placing stock has the lowest reporting requirements and is inexpensive.
The fact that the business is independent of shareholders and retains control over its operations is the primary advantage of issuing stock.
Additionally, by issuing more shares, ownership is now distributed among a larger number of investors. That frequently devalues the shares owned by each owner. Diluting the value of an investment is extremely undesirable because investors buy stocks to make money. Companies can avoid this outcome by issuing bonds.
Through capital markets, financial capital can be raised in two ways: by selling stocks, which are sold in exchange for partial ownership of the business, or by selling bonds, which are similar to loans that the company will repay with interest at a later date.
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