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प्रश्न
‘While there are benefits of going public as a source of finance for a company, it also means additional obligations'.
Analyse and justify the statement.
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उत्तर
Benefits of going public -
- Access to capital - The primary advantage an entrepreneur stands to gain by going public is access to capital. In addition, the capital does not have to be repaid and does not involve an interest charge.
- Other advantages -
- Mergers and acquisitions: Public stock of a company can be used for businesses to grow through acquisitions.
- Higher valuations: Public companies are typically valued more than private companies.
- Benchmark trading price: The trading price of a public company’s stock serves as a benchmark of the offer price of other securities.
- Capital formation: Raising capital later is typically easier because of the extra liquidity for the investors.
- Less dilution: There is less dilution of ownership control compared to an IPO.
Drawbacks:
- Increasing accountability to public shareholders
- Need to maintain dividend and profit growth trends
- Becoming more vulnerable to an unwelcome takeover.
- Need to observe and adhere strictly to the rules and regulations of governing bodies.
- Increasing costs in complying with a higher level of reporting requirements.
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संबंधित प्रश्न
Differentiate between ‘primary market’ and ‘secondary market’ on any five basis.
Explain the recent Capital Market reforms in India.
Answer each of these questions in about fifteen words:
Which sources provide the supply for long-term funds?
Answer each of these questions in about fifteen words:
What is the need of secondary market?
Answer each of these questions in about fifteen words:
In what forms company can raise capital through primary market?
Answer each of these questions in about one hundred and fifty words:
State the nature of money market. Who are the major participants in the money market?
Answer each of these questions in about one hundred and fifty words:
What do you understand by capital market? How can the capital market in India be broadly classified into different categories?
Differentiate between the money market and the capital market.
Primary market is also known as new issue market.
Explain the following term/concept.
Secondary market
Complete the correlation.
Primary market: New issues launched to raise capital:: ______: Old issues through stock market.
Capital market do not provide _________
To be listed on OTCEI, the minimum capital requirement for a company is
Read the following text and answer the following question on the basis of the same:
ISQM SOLAR Limited is searching for options to raise Rs. 20,000 crores from the primary market for diversification and modernisation of existing projects. It hired the services of a renowned financial consultancy firm, DHAN LAXMI Pvr LTD. to suggest options for the same. DHAN LAXMI PVI LTD. suggested a list of options to the Board of Directors of the company. It was decided that for the immediate requirement of Rs. 1,500 crores, the company will give a privilege to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company. Rs. 4,500 crores would be raised by allotment of securities to a consortium of financial institutions, instead of inviting subscription from the public by making a direct appeal to investors to raise capital. It was further decided to raise capital to the tune of Rs. 6,000 crores through an issuing house. All these options were accepted by the Board of Directors. The Board further decided to raise Rs. 8,000 crores through the online system of the stock exchange by entering into an agreement with the exchange.
Identify the method of floatation of new issues in the primary market, not taken up by ISQM SOLAR LTD.:
Read the following text and answer the following question on the basis of the same:
ISQM SOLAR Limited is searching for options to raise Rs. 20,000 crores from the primary market for diversification and modernisation of existing projects. It hired the services of a renowned financial consultancy firm, DHAN LAXMI Pvr LTD. to suggest options for the same. DHAN LAXMI PVI LTD. suggested a list of options to the Board of Directors of the company. It was decided that for the immediate requirement of Rs. 1,500 crores, the company will give a privilege to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company. Rs. 4,500 crores would be raised by allotment of securities to a consortium of financial institutions, instead of inviting subscription from the public by making a direct appeal to investors to raise capital. It was further decided to raise capital to the tune of Rs. 6,000 crores through an issuing house. All these options were accepted by the Board of Directors. The Board further decided to raise Rs. 8,000 crores through the online system of the stock exchange by entering into an agreement with the exchange.
"Rs. 4,500 crores would be raised by allotment of securities to a consortium of financial institutions, instead of inviting subscription from the public by making a direct appeal to investors to raise capital."
Identify the method of floatation of new issues in the primary market being discussed above, which the company has decided to use:
Read the following text and answer the following question on the basis of the same:
ISQM SOLAR Limited is searching for options to raise Rs. 20,000 crores from the primary market for diversification and modernisation of existing projects. It hired the services of a renowned financial consultancy firm, DHAN LAXMI Pvr LTD. to suggest options for the same. DHAN LAXMI PVI LTD. suggested a list of options to the Board of Directors of the company. It was decided that for the immediate requirement of Rs. 1,500 crores, the company will give a privilege to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company. Rs. 4,500 crores would be raised by allotment of securities to a consortium of financial institutions, instead of inviting subscription from the public by making a direct appeal to investors to raise capital. It was further decided to raise capital to the tune of Rs. 6,000 crores through an issuing house. All these options were accepted by the Board of Directors. The Board further decided to raise Rs. 8,000 crores through the online system of the stock exchange by entering into an agreement with the exchange.
How much money was raised by the company through E-IPO's?
Who plays a very vital role as a financial intermediary?
Identify and explain the following concept:
Raju’s father invests his money in a market for long term funds both equity and debt raised within and outside the country.
Which of the following statements is incorrect?
In its vital role as a financial intermediary, capital markets satisfies the tastes of the savers and the need of the investors. Evaluate the given statement.
State the following statements are True or False.
Capital market is the market for long-term funds.
Complete the correlation :
Money market: Short term funds:: ______ : Long term funds
Complete the correlation.
Money market : Short term funds :: ______: Long term funds
Complete the correlation:
Money market : Short term funds :: ______ : Long term funds
