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Companies divide the ownership into shares or equity instruments and then sell them to investors. The company to uses the proceeds from the sale of the shares as it sees fit.
As an investor in either a debt or equity instruments there are risks. With a debt instruments there is the major risk that the company will not be able to make the loan payments and will default on the loan and you will lose your principal that you loaned to the company. With equity instruments there is the risk that the company will not be successful and will go out of business, therefore making the shares you own worthless...
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