FM8e- ch17 - 17 - 1 CHAPTER 17 Initial Public Offerings,...

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17 - 1 . . Initial Public Offerings Investment Banking and Regulation The Maturity Structure of Debt Refunding Operations The Risk Structure of Debt CHAPTER 17 Initial Public Offerings, Investment Banking, and Financial Restructuring
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17 - 2 . . The Securities and Exchange Commission (SEC) regulates: Interstate public offerings. National stock exchanges. Trading by corporate insiders. The corporate proxy process. The Federal Reserve Board controls margin requirements. What agencies regulate securities markets? (More. ..)
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17 - 3 . . States control the issuance of securities within their boundaries. The securities industry, through the exchanges and the National Association of Securities Dealers (NASD), takes actions to ensure the integrity and credibility of the trading system. Why is it important that securities markets be tightly regulated?
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17 - 4 . . How are start-up firms usually financed? Founder’s resources Angels Venture capital funds Most capital in fund is provided by institutional investors Managers of fund are called venture capitalists Venture capitalists (VCs) sit on boards of companies they fund
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17 - 5 . . In a private placement , such as to angels or VCs, securities are sold to a few investors rather than to the public at large. In a public offering , securities are offered to the public and must be registered with SEC. Differentiate between a private placement and a public offering. (More. ..)
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17 - 6 . . Privately placed stock is not registered, so sales must be to “accredited (high net worth) investors. Send out “offering memorandum” with 20-30 pages of data and information, prepared by securities lawyers. Buyers certify that they meet net worth/ income requirements and they will not sell to unqualified investors.
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17 - 7 . . Advantages of going public Current stockholders can diversify. Liquidity is increased. Easier to raise capital in the future. Going public establishes firm value. Makes it more feasible to use stock as employee incentives. Increases customer recognition. Why would a company consider going public? (More. ..)
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. . Disadvantages of Going Public Must file numerous reports. Operating data must be disclosed. Officers must disclose holdings. Special “deals” to insiders will be more difficult to undertake. A small new issue may not be
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FM8e- ch17 - 17 - 1 CHAPTER 17 Initial Public Offerings,...

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