SOC 202 Lecture Notes - Liquid Oxygen, Efficient-Market Hypothesis, Underwriting
12 Mar 2014
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Lo1 the venture capital market and its role in the financing of new, high-risk ventures. Lo2 how securities are sold to the public and the role of investment banks in the process. Lo3 initial public offerings and some of the costs of going public. Lo4 how rights are issued to existing shareholders and how to value those rights. Answers to concepts review and critical thinking questions. 9. (lo2) a company"s internally generated cash flow provides a source of equity financing. For a profitable company, outside equity may never be needed. Debt issues are larger because large companies have the greatest access to public debt markets (small companies tend to borrow more from private lenders). Equity issuers are frequently small companies going public; such issues are often quite small. (lo2) from the previous question, economies of scale are part of the answer. Beyond this, debt issues are simply easier and less risky to sell from an investment bank"s perspective.
