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A corporate may raise capital in the primary market through
1. Initial public offer
2. Rights issue
3. Private placement
Select the correct answer code:
- a)1 only
- b)1, 2
- c)1, 2, 3
- d)1, 3
Correct answer is option 'C'. Can you explain this answer?
Verified Answer
A corporate may raise capital in the primary marketthrough1. Initial p...
A corporate may raise capital in the primary market by way of an initial public offer, rights issue or private placement.
An Initial Public Offer (IPO) is the selling of securities to the public in the primary market.
A rights issue is an invitation to existing shareholders to purchase additional new shares in the company. This type of issue gives existing shareholders securities called rights.
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.
Most Upvoted Answer
A corporate may raise capital in the primary marketthrough1. Initial p...
A corporate may raise capital in the primary market by way of an initial public offer, rights issue or private placement.
An Initial Public Offer (IPO) is the selling of securities to the public in the primary market.
A rights issue is an invitation to existing shareholders to purchase additional new shares in the company. This type of issue gives existing shareholders securities called rights.
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.
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A corporate may raise capital in the primary marketthrough1. Initial p...
**Raising Capital in the Primary Market**
**Initial Public Offer (IPO)**
- An IPO is the first time a company offers its shares to the public to raise capital.
- It allows companies to raise funds from a wide range of investors by selling shares on the stock exchange.
**Rights Issue**
- A rights issue is an offering of shares made to existing shareholders in proportion to their current holdings.
- It gives shareholders the option to purchase additional shares at a discounted price, allowing the company to raise capital from its existing investor base.
**Private Placement**
- Private placement involves the sale of shares to a select group of investors, such as institutional investors or high net-worth individuals, without making them available to the general public.
- It is a more targeted approach to raising capital and can be less costly and time-consuming compared to an IPO.
**Conclusion**
- Companies have multiple options to raise capital in the primary market, including IPOs, rights issues, and private placements.
- Each method has its own advantages and considerations, depending on the company's funding needs, investor base, and strategic objectives.
**Initial Public Offer (IPO)**
- An IPO is the first time a company offers its shares to the public to raise capital.
- It allows companies to raise funds from a wide range of investors by selling shares on the stock exchange.
**Rights Issue**
- A rights issue is an offering of shares made to existing shareholders in proportion to their current holdings.
- It gives shareholders the option to purchase additional shares at a discounted price, allowing the company to raise capital from its existing investor base.
**Private Placement**
- Private placement involves the sale of shares to a select group of investors, such as institutional investors or high net-worth individuals, without making them available to the general public.
- It is a more targeted approach to raising capital and can be less costly and time-consuming compared to an IPO.
**Conclusion**
- Companies have multiple options to raise capital in the primary market, including IPOs, rights issues, and private placements.
- Each method has its own advantages and considerations, depending on the company's funding needs, investor base, and strategic objectives.
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A corporate may raise capital in the primary marketthrough1. Initial public offer2. Rights issue3. Private placementSelect the correct answer code:a)1 onlyb)1, 2c)1, 2, 3d)1, 3Correct answer is option 'C'. Can you explain this answer?
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