Test: Resource Mobilization- 1 - Commerce MCQ

A private placement is a sale of stock shares or bonds to pre-selected investors and institutions rather than on the open market. It is an alternative to an initial public offering (IPO) for a company seeking to raise capital for expansion.
Examples of the types of securities that may be sold through a private placement are common stock, preferred stock, and promissory notes.

Venture capitalists are typically very selective in deciding what to invest in and as a rule of thumb:

1. They may invest in one in four hundred opportunities presented to it,
2. Looks for the extremely rare, yet sought after qualities, such as :
   (a) innovative technology,
   (b) potential for rapid growth,
   (c) a well-developed business model
   (d) an impressive management team.
3. Looks for an "exit" in the time frame of typically 3-7 years.
4. Is inclined towards ventures with exceptionally high growth potential.

The VC do not fund for seed capital as its result and return both are not sure

• A venture capitalist (VC) is a private equity investor that provides capital to companies exhibiting high growth potential in exchange for an equity stake. This could be funding startup ventures or supporting small companies that wish to expand but do not have access to equities markets.
• Venture capital is a form of financing that provides funds to early-stage, emerging companies with high growth potential, in exchange for equity Stockholders EquityStockholders Equity (also known as Shareholders Equity) is an account on a company's balance sheet that consists of share capital plusor an ownership stake.

The organisation, management, membership and functioning of stock exchanges in India are governed by the provisions of The Securities Contracts (Regulation) Act, 1956.
This Act permits only recognized stock exchanges to function under the rules, regulations and by laws approved by the Central Government. At present there are 24 stock exchange in India.
The stock exchanges of India have the following organisational form:

• Voluntary non-profit making associations
• Public limited company
• Company limited by guarantee

The governing body is responsible for policy formulation and proper functioning of the exchange, having wide range of powers viz.

• Elect the office bearers and set up committees
• Admit and expel members
• Manage the properties and finance of the exchange
• Interpret rules, regulations and by-laws
• Adjudicate disputes
• Conduct the affairs of the exchange

• The term "bid" refers to the highest price a buyer will pay to buy a specified number of shares of a stock at any given time.
• The term ask refers to the lowest price at which a seller will sell the stock.
• The bid price will almost always be lower than the ask or “offer,” price.

A limit order is an order to buy or sell a stock with a restriction on the maximum price to be paid or the minimum price to be received (the “limit price”). If the order is filled, it will only be at the specified limit price or better.
For example, if a trader is looking to buy XYZ's stock but has a limit of $14.50, they will only buy the stock at a price of $14.50 or lower. Limit orders can also be left open with an expiration date.

Right Issue means to offer shares to the existing shareholders of the company in proportion to their existing share holding in the company for the purpose of raising fresh capital for the company. With these rights the shareholders of the company can purchase new shares at a discounted rate to the market price.

The Securities and Exchange Board of India is the regulatory body for securities and commodity market in India under the jurisdiction of Ministry of Finance, Government of India. It was established on 12 April 1992 and given Statutory Powers on 30 January 1992 through the SEBI Act, 1992.