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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.
State how sources can broadly be classified into two major categories.
Answer each of these questions in about fifteen words:
Which sources provide the supply for long-term funds?
Answer this question in about fifteen words:
What is Right Issue?
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 two hundred and fifty words:
“An entrepreneur can raise the required capital in the primary market.” Explain the various methods of raising the funds in the primary market by an entrepreneur.
Primary market is also known as new issue market.
Justify the following statement.
Capital market is useful for the corporate sector.
Assertion (A): Stock exchange is an important constituent of the money market.
Reasoning (R): Stock exchange is an organization in which stocks, bonds, commodities etc. are traded.
Capital market do not provide _________
Primary and secondary markets
The most commonly used method for raising funds in primary market is ______.
Which market directly contributes to capital formation?
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.
How much money was raised by the company through E-IPO's?
State any one advantage each for a company that opts for private placement and rights issue as a source to raise 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.
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
What does the capital market help support as an important part of the financial system?
Which are sources of long‑term funds supplied to the capital market?
Which group supplies long‑term funds to the capital market?
Through what market/medium are long‑term funds (debt and equity) raised and invested?
Which pair is also included among capital market instruments?
