Why do companies issue shares? Class 7

Why do companies issue shares? Class 7

Question 1.

Why do companies issue shares? Class 7

Answer:

1. Raise Funds: Companies issue shares to raise money for their operations, like expanding their business or developing new products. This helps them grow without taking loans.
2. Ownership Sharing: By selling shares, companies allow people to become part-owners. This means shareholders can benefit from the company's success through profits. This spreads ownership and risk.

Question 2.

Why do people buy shares? Are there any benefits of owning shares? Class 7

Answer:

1. Potential for Profit: People buy shares hoping their value will increase over time, allowing them to sell for a profit later. This can grow their savings.
2. Dividends and Ownership: Owning shares can provide dividends, which are payments from profits. Shareholders also have a say in company decisions, making them feel involved.