Intermediate Financial Management
14th Edition
ISBN: 9780357516782
Author: Brigham, Eugene F., Daves, Phillip R.
Publisher: Cengage Learning
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Question
Chapter 18, Problem 2Q
Summary Introduction
To determine: The reason why might such a firm decide to go public.
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Students have asked these similar questions
Many companies that go public with an IPO don’t actually need additional cashto continue growing their operations. Why might such a firm decide to go public?
Why would so many people invest in a company like AFCO? What could investors have done to prevent themselves from falling into investment schemes such as this?
Which of the following is an incentive for firms to conduct an IPO?
Underwriter and advisor fees are typically substantial.
Venture capitalists will be more able to sell their shares.
Reporting requirements are more stringent for public companies.
The company may become subject to a hostile takeover.
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- What are the basic arguments for increasing capital requirements at large commercial banks? In what ways will depositors, stockholders, and society in general benefit? How might each group be disadvantaged? As commercial banks enter new lines of business such as brokerage, how much additional capital should be required? Should these new lines of business be insured by the FDIC? Why or why not? Give examples from today’s financial marketplace.arrow_forward• When looking to invest corporate dollars, is the top-down approach is preferred over the bottom-up approach? Why or why not?arrow_forwardWhich of the following is not a financing decision? A Should the firm borrow money from a bank or sell bonds? B Should the firm shut down an unprofitable factory? C Should the firm buy or lease a new machine that it is committed to acquiring? D Should the firm issue preferred stock or common stock?arrow_forward
- Why would it be desirable to switch from an S corporation to C corporation once the business is growing fast?arrow_forwardWhat is meant by the goal of maximization of shareholder wealth? The government has passed regulations that require pollution controls, development restrictions, and pay equity over the years. But, can a firm still achieve the maximization of shareholder wealth? How?arrow_forwardIn times of crisis companies are often seen to be paying stable dividends. The question however is, should companies retain these dividends in the firm to protect employment and investments? Should companies preserve their financial flexibility in times of financial crises? Discuss the ethics of dividends and illustrate how dividends and related issues (e.g. dividend taxation) can play a part in rethinking the capitalist paradigm.arrow_forward
- Carrington and Genevieve agree that they would like to try to increase the value of the company stock. Like many small business owners, they want to retain control of the company and do not want to sell stock to outside investors. They also feel that the company's debt is at a manageable level and do not want to borrow more money. What steps can they take to increase the price of the stock? Are there any conditions under which this strategy would not increase the stock price?arrow_forwardExamine the reasons as to why investment banks achieve high levels profits and why large profits cause controversy with the public? Explain.arrow_forwardCan a firm still achieve the maximization of shareholders' wealth even if the government has passed regulations that require pollution controls, development restrictions, and pay equity over the years? how?arrow_forward
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