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The largest source of long-term financing for U
The largest source of long-term financing for U.S. firms for the last 40 years has been:
a. Reinvestment of profits,
b. Borrowing from banks,
c. Long-term bonds,
d. Common stock issues,
e. Preferred stock issues.
Expert Solution
Option d is correct.
The issuance of common stocks has been considered an effective source of long-term financing in the United States due to its returns history.
Option a is incorrect. Reinvestment of profit is not an effective source of long-term financing.
Option b is incorrect. United States history related to borrowing from banks has not been effective.
Option c is incorrect because long-term bonds are the second-largest source of long-term financing in the United States.
Option e is incorrect because this source is not available for every investor.
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