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Why do companies go to the public to raise funds? To avoid high interest costs associated with loans To gain greater credibility by getting listed To meet huge capital requirements All of the above

Question

Why do companies go to the public to raise funds? To avoid high interest costs associated with loans To gain greater credibility by getting listed To meet huge capital requirements All of the above

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Solution

All of the above. Companies go public to raise funds for several reasons.

  1. To avoid high interest costs associated with loans: When a company borrows money, it has to pay interest on that loan, which can be quite high. By going public and selling shares, a company can raise money without incurring this interest cost.

  2. To gain greater credibility by getting listed: Being listed on a stock exchange can enhance a company's reputation and credibility. This can make it easier for the company to attract more investors and customers.

  3. To meet huge capital requirements: Sometimes, a company's capital needs are so large that the only way to meet them is by going public. This is often the case for companies in capital-intensive industries, such as manufacturing or technology.

So, all of the above reasons are why companies go to the public to raise funds.

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