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Corporate Finance

Corporations need financing for the purchase of assets and the payment of expenses. The corporations can issue shares in ex­change for money or property. Sometimes it is called as equity fund­ing. The holders of the shares form the ownership of the company. Each share is represented by a stock certificate, which is negotia­ble. It means that one can buy and sell it. The value of a share is determined by the net assets divided by the total number of shares outstanding. The value of the share depends on the success of the com­pany. The greater the success, the more value the shares have.

A corporation can also get capital by borrowing. It is called debt funding. If a corporation borrows money, they give notes or bonds. They are also negotiable. But the interest has to be paid out whether business is profitable or not.