1.3 Financial Instruments - Equity

1.3 Financial Instruments - Equity - Click to edit Master...

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Unformatted text preview: 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 Click to edit Master subtitle style 8/29/2010 © H Toprac Foundations of Finance 1.3 Financial Instruments Equity Instruments 8/29/2010 © H Toprac 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? 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...
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This note was uploaded on 12/30/2010 for the course MIS 302f taught by Professor Staff during the Spring '08 term at University of Texas at Austin.

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1.3 Financial Instruments - Equity - Click to edit Master...

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