Capital market; method of raising fund, offer for sale, offer/subscription, right issue, private placement. - SS3 Commerce Past Questions and Answers - page 1
Which method of raising funds in the capital market involves selling existing shares to the public?
Offer for Sale
Offer/Subscription
Right Issue
What is the purpose of a right issue in the capital market?
To raise additional capital from existing shareholders
To sell new securities to the public
To issue bonds to institutional investors
In private placement, securities are sold directly to:
The general public
Existing shareholders
Select groups of investors
Which method involves issuing new securities to the public or specific groups of investors?
Offer for Sale
Offer/Subscription
Right Issue
What is the key difference between an offer for sale and a right issue?
Offer for sale involves new securities, while right issue involves existing shares.
Offer for sale raises funds for the company, while right issue benefits selling shareholders.
Offer for sale is targeted to select investors, while right issue is open to the public.
Offer for sale raises funds for the company, while right issue benefits selling shareholders.
How does a company benefit from conducting a right issue?
A right issue allows a company to raise additional capital from its existing shareholders. It provides an opportunity for shareholders to invest more in the company and maintain or increase their ownership stake. The funds raised through a right issue can be used for business expansion, reducing debt, or funding new projects.
What is the main characteristic of private placement in the capital market?
Private placement involves selling securities directly to select groups of investors, such as institutional investors, venture capitalists, or private equity firms. It is a targeted approach, bypassing the general public. Private placement transactions are typically conducted through negotiations and involve issuing securities that are not publicly traded.