Businesses issue stock to raise capital.

Advantages of issuing stock:

* A Company can raise more capital than it could borrow.
* A Company does not have to make periodic interest payments to creditors.
* A Company does not have to make principal payments.

Disadvantages of Issuing Stock:

* The principal owners have to share their ownership with other shareholders.
* Shareholders have a voice in policies that affect the company operations.

Advantages for Stockholders

As part owner of a corporation, you may be entitled to share in the profits of the company. There is also a chance that the company will grow and the price of the stock may rise.

If the company achieves economic success, the stock value will go up and stockholders will benefit. For example, if you invested $1,000 to buy 100 shares of a company at $10 each and the shares rose to $13 each you would gain $300. This is equivalent to a 30% return. In cases like this, both the stockholders and the business would be pleased