CF How Corporations Issue Securities - Opdrachten
19 important questions on CF How Corporations Issue Securities - Opdrachten
What is a Rights issue?
What is a 144a Issue?
What is a private placement?
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What is meant with shelf registration?
What is venture capital?
When are the proportionate underwriting and administrative costs lower?
Large/small Issue
Bond/ common stock issue
IPO/Subsequent issue
Small private placement of Bonds/ a small general cash offer of bonds
2. A bond issue
3. Subsequent issue of stock
4. A small private placement of bonds
Is it true that venture capitalists typically provide first-stage financing sufficient to cover all development expenses. Second-stage financing is provided by stock issued in an IPO.
Is it true that underpricing in an IPO only a problem is when the original investors are selling part of their holdings?
Is it true that stock prices generally fall when the company announces a new issue of shares? This is attributable (toe te schrijven) to the information released by the decision to issue.
What is meant with Zero-stage vs first- or second- stage financing?
What is carried interest?
What is a rights issue?
What is a road show?
What is a qualified institutional buyer?
Why are the costs of debt issues less than those of equity issues?
- The cost of complying with government regulations may be lower for debt.
- the risk of the security is less for debt and hence the price is less volatile. This decreases the probability that the issue will be mispriced and therefore decreases the underwriter's risk.
What are the three reasons that a common stock issue might cause a fall in price?
- The price fall is needed to absorb the extra supply.
- The issue causes temporary price pressure until it has been digested.
- Management has information that stockholders do not have
What could be the reasons that there are differences in costs for an IPO?
- Large issues have lower proportionate costs.
- Debt issues have lower costs than equity issues.
- Initial public offerings Involve more risk for underwriters than issues of seasoned stock. Underwriters demand higher spreads in compensation.
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Why do venture capital companies prefer to advance money in stages?
Explain the difference between a uniform-price auction and a discriminatory auction
- In a uniform price auction, all successful bidders pay the same price. In a discriminatory auction, each successful bidder pays a price equal to his bid.
- The differenc: A uniform-price auction provides for the pooling of information from bidders and reduces the winner's curse.
- You may prefer to sell according to uniform-pricing auction because it is more attractive to shareholders. On the other hand, if you assume sufficient shareholders to have a positive view of the firm's shares you may opt for discriminatory auction as it may lead to larger cash flow.
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