bank can get to know the firm extremely well—often because the bank can monitor sales and expenses quite

accurately by looking at deposits and withdrawals. Relatively large and well-known firms often issue bonds

instead. They use bonds to raise new financial capital that pays for investments, or to raise capital to pay off

old bonds, or to buy other firms. However, the idea that firms or individuals use banks for relatively smaller

loans and bonds for larger loans is not an ironclad rule: sometimes groups of banks make large loans and

sometimes relatively small and lesser-known firms issue bonds.

Corporate Stock and Public Firms

A corporation is a business that “incorporates”—that is owned by shareholders that have limited liability for

the company's debt but share in its profits (and losses). Corporations may be private or public, and may or may

not have publicly traded stock. They may raise funds to finance their operations or new investments by raising
{"batch_upload": true, "file_name": "Microeconomics3e.pdf", "upload_timestamp": "2026-02-07T15:24:38.309401", "creator": "PDFMiner", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "producer": "Prince 14.2 (www.princexml.com)", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "moddate": "2022-12-07T14:23:05-06:00", "file_size_mb": 26.99, "title": "Principles of Microeconomics 3e", "uploaded_via": "batch_uploader", "file_type": ".pdf", "total_pages": 597, "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "creationdate": "2022-12-07T14:15:44-06:00"}