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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.
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
Answer the following question:
An investor wanted to incest RS. 20,000 in Treasury Bills for a period of 91 days. When he approached the Reserve Bank of India for this purpose he came to know that it was not possible.
Identify the reason why the investor could not invest in the Treasury Bill.
Explain the recent Capital Market reforms in India.
Answer each of these questions in about fifteen words:
Name the sources of demand for capital comes from.
Answer each of these questions in about fifteen words:
What is a secondary market?
Answer each of these questions in about fifteen words:
What is the need of secondary market?
Answer each of these questions in about one hundred and fifty words:
Explain how capital markets are the most important source of raising finance for an entrepreneur.
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?
Answer each of these questions in about one hundred and fifty words:
Write down the sectors of organized and unorganized market.
Answer each of these questions in about one hundred and fifty words:
What is meant by primary market? Briefly explain the concept of ‘Right Issue for existing companies’.
High Order Thinking Skills
Why primary market is also known as new issue market? Give one reason.
Answer each of these questions in about fifteen words:
What is a secondary capital market?
Complete the correlation:
Money market : Short-term funds :: ______ : Long-term funds
Policy that aims at managing the quantity of money in order to meet the requirements of different sectors of the economy and to increase the pace of economic growth –
Capital market do not provide _________
What is Capital Market?
Primary and secondary markets
Full form of NSDL 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?
Which of the following statements is incorrect?
Identify the place where transaction happens in shares or debentures subsequent to its primary offering.
Which among the following is NOT a method of raising the required capital in the primary market?
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
