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MGTA02H3 (143)

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Management (MGT)
Tarun Dewan

This Week - Please Read Chapter 19 What Are Shares? Why Do Entrepreneurs Sell Shares? Why Do Investors Buy Shares Rights of Ownership: Voting, Dividends, Growth in Value Investment Banks: Help both sides Primary vs. Secondary Securities Markets Market Value of a Share What Are "Shares"? A share is a piece of paper. It is evidence of part ownership in a corporation. Here's a share in: the Walt Disney Company Here's a Share in Microsoft Why Do Entrepreneurs Sell Shares? Businesses are expensive to start Entrepreneurs need lots of $$$ Selling shares in the business increases $$$ available Entrepreneurs need interested and committed co-owners Another reason why entrepreneurs sell shares: The are selling part of their business to NEW owners. Recent example: Wendy's Corporation sells Tim Horton's Why Do Investors Buy Shares? Because they have spare cash Because they want to park it somewhere Because a share confers rights and benefits of ownership: Right to vote at annual meetings of shareholders Right to share in profits of business. (Typically, dividends) Gains to value of shares (caused by the growth) Investment banks Collect, package and distribute funds from "investors" to companies. Advise entrepreneurs on timing, pricing and marketing of shares to investors. Through stock brokers: sell shares to investors. Primary securities market Corporations helped by investment bankers and secu
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