Which of the following statements about financial markets is not true? Group of answer choicesAn inital public offering is a way for companies to raise financial capital to build or expand their business.All of these.Investment banks facilitate the IPO connection between investors and entrepreneurs.Once investors purchase stock, they become part owners in the company and take on the risk of company failure.Bond purchasers become partial owners of the company they invest in.
Question
Which of the following statements about financial markets is not true? Group of answer choicesAn inital public offering is a way for companies to raise financial capital to build or expand their business.All of these.Investment banks facilitate the IPO connection between investors and entrepreneurs.Once investors purchase stock, they become part owners in the company and take on the risk of company failure.Bond purchasers become partial owners of the company they invest in.
Solution
The statement that is not true about financial markets is: "Bond purchasers become partial owners of the company they invest in."
This is incorrect because when you purchase a bond, you are essentially lending money to the entity that issued the bond. In return, the issuer promises to pay you back the face value of the bond at a specified date in the future, and to make periodic interest payments to you until that time. Unlike stockholders, bondholders do not have ownership rights in the company.
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