How can a corporation raise capital?

A corporation can raise capital primarily by issuing shares of stock and bonds. When a corporation issues shares of stock, it sells ownership interests in the company to investors. This allows the corporation to raise equity capital, which does not require repayment and may also provide investors with dividends based on the company's performance. Issuing bonds involves borrowing money from investors with a promise to repay the principal along with interest. This method enables the corporation to acquire debt financing that can be used for expansion, research, or other operational needs without giving away ownership.

The choice involving acquiring loans from banks only is too narrow, as it limits the methods of raising capital to just one source of financing, ignoring the benefits of equity financing through stock issuance. Increasing salaries of top executives does not generate capital; instead, it typically results in increased expenses without any influx of funds into the organization. Cutting operational costs may improve profitability but does not raise new capital; it relates more to managing existing resources efficiently. Thus, issuing shares and bonds presents the most comprehensive and effective strategy for a corporation looking to raise capital.