Questions: A firm can fund an expansion of its operations by A. issuing bonds. B. buying stock. C. loaning money. D. paying dividends.

The answer is A: issuing bonds.

Explanation for each option:

A. Issuing bonds: This is correct. When a firm issues bonds, it is essentially borrowing money from investors with the promise to pay back the principal along with interest at a later date. This is a common method for companies to raise capital for expansion without diluting ownership.

B. Buying stock: This is incorrect. Buying stock refers to purchasing shares of other companies, which is an investment activity. It does not generate funds for the firm itself; rather, it uses the firm's existing funds.

C. Loaning money: This is incorrect. Loaning money means the firm is lending its own money to others, which again uses the firm's existing funds rather than raising new capital.

D. Paying dividends: This is incorrect. Paying dividends involves distributing a portion of the firm's earnings to its shareholders. This action uses the firm's funds and does not help in raising new capital for expansion.

In summary, the correct way for a firm to fund an expansion of its operations is by issuing bonds.