Mid-Term_2_Review

Mid-Term_2_Review - BA 301 Mid-Term 2 Review Professor Gray...

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BA 301 Mid-Term 2 Review Professor Gray
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Question Distribution Chapter 4: 8 Questions Chapter 6: 3 Questions Chapter 7: 7 Questions Chapter 8: 2 Questions Chapter 9: 20 Questions
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Chapter 4: Strategic Financial Management Capital Budgeting-Def. The Dividend Decision The Investment Decision Capital Structure-Def. How to calculate the Weighted Average Cost of Capital; The Tax Effect of Debt
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Chapter 6: The Financial Life Cycle Venture Capital Financing and expected returns on Investments; The SEC, its roles and responsibilities; Initial Public Offerings; Investment Banks-roles and responsibilities and Due Diligence Obligations;
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The SEC as Regulator 1. Protect Investors 2. Information Disclosure 3. Operational and Pricing Efficiency of Security Markets 4. Fair and Orderly Markets Primary Roles/Goals
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Seed/Startup Funding Earliest stage of business, typically no operating history. Investment is based on a business plan, the management group backgrounds along with the market and financial projections . First Round Funding Typically funding that accomodates growth. Company may have finished R&D. Funding is often in the form of convertible bond. Intermediate/Second Round Funding Maturing company where a future leveraged buyout, merger or acquisition and/or initial public offering is a viable option. Later Stage Funding Mature company where funds are needed to support major expansion or new product development. Company is profitable or breakeven . Venture Capital Financing
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Later Stage Funding Mature company where funds are needed to support major expansion or new product development. Company is profitable or breakeven . Equity Loan Offer of an ownership position to induce the loan or can be a note that has an option to convert from debt to equity. Mezzanine Funding Company's progress makes positioning for an Initial Public Offering viable. Venture funds are used to support the IPO. Venture Capital Financing
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The Role of Securities Markets Primary Securities Market Source of Capital Secondary Securities Market Liquidity for Primary Market Price Determination
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Initial Public Offering (IPO) Initial Public Sale of Common Stock to Investors Seasoned Offerings Subsequent Sales of Common Stock to Investors Also Known as Secondary Offerings The Financing Life Cycle
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The Primary Securities Market Initial Public Offerings (IPOs) The Initial Sale of Common Stock to the Public by a Company The Average First Day Return (15%) is Evidence of Underpricing The Winner’s Curse - The Average Investor Does Not Get the First Day Return The Long-Term (3-Year) Adjusted Performance of IPOs is Negative
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Chapter 7: The Capital Markets The role of the Specialist; Stock Markets, computation of stock indices, exchanges and ECNs; Bid /Ask Spreads, what dealer would you buy from and sell to; Market Orders versus Limit Orders; SEC, Securities Act of 1933 and Securities and Exchange Act of 1934.
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Mid-Term_2_Review - BA 301 Mid-Term 2 Review Professor Gray...

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