What is the term for funds raised by issuing shares?

What is the term for funds raised by issuing shares?

• A. Share Capital
• B. Debentures
• C. Working Capital
• D. Retained Profits

Answer: (A)

Funds raised by issuing shares are called share capital. When a company issues new shares to investors, the money received becomes part of the shareholders’ equity, representing ownership in the business rather than a loan to be repaid. This is different from debentures (long‑term borrowings that must be repaid with interest), from working capital (the day‑to‑day funds needed to run the business), and from retained profits (profits kept in the company after distributing dividends). Share capital can help finance growth without adding debt, though it can dilute existing owners’ stakes.

Funds raised by issuing shares are called share capital. When a company issues new shares to investors, the money received becomes part of the shareholders’ equity, representing ownership in the business rather than a loan to be repaid. This is different from debentures (long‑term borrowings that must be repaid with interest), from working capital (the day‑to‑day funds needed to run the business), and from retained profits (profits kept in the company after distributing dividends). Share capital can help finance growth without adding debt, though it can dilute existing owners’ stakes.