Is a form of equity in which investors who purchase these shares receive a percentage of the ownership of the company, as well the guaranteed percentage of future profits the company earns. Unlike with bonds this investment from investors never has to repaid back directly at a fixed point in time, but the company has to sacrifice some of its ownership to raise finance through this channel compared to issuing debt.
Below illustrates the basic transaction of an investor buying shares in a bank. This is one of the main ways that a bank can raise finance for their asset creation like loans. However the more equity a company issues the less control over the operations of the business they have.
