Which of the following best describes equity financing?

Equity financing refers to the method of raising capital by selling shares of a company, effectively giving investors ownership stakes in the business. By issuing shares, a company can attract funds without the obligation to repay the capital, unlike with loans or bonds. Investors who buy shares expect to benefit from the company's growth and profitability through capital appreciation and dividends.

This method is particularly advantageous for startups and growing businesses, as it allows them to generate funds while retaining cash flow since they are not burdened with debt repayment. In contrast, other options describe different financing methods—loans involve borrowing with a repayment obligation, bond sales typically relate to debt financing, and collateral refers to assets pledged to secure a loan. Thus, the essence of equity financing lies in the sale of ownership, making the correct description "Funds raised through issuing shares."