A corporation can use an initial public offering of stock to borrow money that it must pay back.

Question

Quizplus · Accepted Answer

An initial public offering (IPO) of stock is a way for a corporation to raise funds by selling shares of ownership in the company to the public. The company does not borrow money with an IPO, but rather receives cash in exchange for the ownership stake. The company is not obligated to repay this money, but new shareholders will expect the company to use the funds to grow the business and increase profitability.

A Corporation Can Use an Initial Public Offering of Stock