Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Discuss the benefits and drawbacks, to the shareholders of a company, of a public listing on a stock exchange compared to private equity finance as a way of disposing their shares.
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Introduction :
A public company refers to a company where there are many shareholders and the shares of the company trade on the stock exchange with a wide holder base. On the other hand, the private company refers to a company in which the number of shareholders is small and each shareholder holds a significant part of the company.
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- Which of the following is INCORRECT description for private equity transactions? Group of answer choices a. There are liquid public markets for privately held securities such as NASDAQ. b. The process of creating value in private equity, whether building a brand-new company or turning around an established one requires significant time and means a long-term relationship. c. The general partner participates actively in the governance of the investment d. Private equity investing is a lot of work as gaining access to better opportunities requires active sourcing and negotiationarrow_forwardWhen valuing private companies, we use public companies as comparables to gain insights into how the capital markets assess the riskiness of the private company’s business. Are there any potential caveats to this approach?arrow_forwardWhich of the following statements is false? A. Mutual funds are pool investor funds to purchase financial instruments and thus reduce risks through diversification. B. Initial public offering (IPO) occurs when firm issues stock in the public market for the first time. C. The difference between current assets and non-current assets equals to working capital. D. Owner’s equity is the residual interest in assets that remains after subtracting an entity’s liabilities.arrow_forward
- This is my assignmentarrow_forwardWhat factors to determine in choosing either Bonds / Preference Shares or Ordinary Shares as the firm’s capital structure?arrow_forwardi. Critically examine the factors that necessitate the issue ofpreference shares by companies. ii. Most companies in our part of the world prefer to befinanced by ordinary capital to preference capital. Discussarrow_forward
- Which of the following statements is true? Group of answer choices a. Dividend payments are attractive to executives who hold many executive stock options that were awarded to them by their firms b.Executives and other insiders benefit most by being able to tender their shares in an open market repurchase since they usually are privy to information that is not available to the general public c.Empirical research suggests that small, retail investors prefer stock repurchases to dividend payments d. a firm does not pay dividends, some institutional investors are prohibited from investing it the firmʹs equityarrow_forwardThere is a lot of discussion in the press at the moment about companies issuing shares and debenture offerings. Required: Explain the meaning of "issuing share capital" and the meaning of "debenture offerings" as a means of obtaining finance for a company. Outline at least 3 key differences between shares and debentures in your answer.arrow_forwardHow will investors maximize the returns of corporatebonds or redeem their corporate bonds?arrow_forward
- In some circumstances, corporations will buy back their own stock – called Treasury Stock. Identify three reasons why a company may choose to do so.arrow_forwardA corporation may raise funds by offering shares of stocks to investors. Express your idea or understanding of this process.arrow_forwardIs there a type of stock preferable over the other? Should a corporation also utilize borrowing if it is already issuing stock?arrow_forward
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