Correct Option: A

Companies issue securities called stocks and bonds to raise necessary capital which funds the company’s daily operations and growth. Stock represents fractional ownership in the company. Investors may purchase preferred or common stock. Bonds represent loans of the company to lenders called bondholders. A company decides to sell stock when it needs longterm access to capital. Unlike bond loans, issuing stock to owners called stockholders doesn’t require the company’s repayment of investor principal.