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1.3 Financial Instruments - Equity

1.3 Financial Instruments - Equity - There are risks and...

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Click to edit Master subtitle style  8/29/2010   ©  H Toprac There are risks and costs to a program of action. But they are far less than the long-range risks and costs of comfortable inaction. John F. Kennedy
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Click to edit Master subtitle style  8/29/2010   ©  H Toprac Foundations of Finance 1.3 Financial Instruments Equity Instruments
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 8/29/2010   ©  H Toprac 3 When companies need extra cash, they have two options: Borrow the money Sell something they own, above and beyond selling their regular product or service; that is, sell part of the company The first option is called issuing debt; the second, issuing equity Remember how companies raise cash?
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 8/29/2010   ©  H Toprac Companies can issue equity in two ways: Private placement: A start-up might sell a portion of itself to a single investor or venture capital company (or a small group of same) Go public: A bigger firm might sell many tiny pieces of itself (shares of stock) to each of many investors (stockholders/shareholders) 4 How do companies issue equity?
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