Securities ch 13,15 (exam 3)

Securities ch 13,15 (exam 3) - How Corporations Issue...

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Unformatted text preview: How Corporations Issue Securities Chapters 15 and 13 Topics Covered Venture Capital The Initial Public Offering Alternative Issue Procedures for IPOs Security Sales by Public Companies Rights Issue Private Placements and Public Issues Market Efficiency, Behavioral Finance, and Issuing Securities Venture Capital Since success of a new firm is highly dependent on the effort of the managers, restrictions are placed on management by the venture capital company and funds are usually dispersed in stages, after a certain level of success is achieved. Venture Capital Money invested to finance a new firm U.S. Venture Capital Investments 7.9 10.8 14.6 20.7 53.5 104.4 40.5 21.7 19.6 21.8 22.4 26.7 30.9 28.3 20 40 60 80 100 120 $ Millions 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Initial Offering Initial Public Offering (IPO)- First offering of stock to the general public. Underwriter- Firm that buys an issue of securities from a company and resells it to the public. Spread- Difference between public offer price and price paid by underwriter. Prospectus- Formal summary that provides information on an issue of securities. Underpricing- Issuing securities at an offering price set below the true value of the security. Motives For An IPO Percent of CFOs who strongly agree with the reason for an IPO The Top Managing Underwriters Underwriter Value of Issues ($billion) Number of issues J.P.Morgan $455 1210 Barclays Capital 401 1041 Citi 309 986 Deutsche Bank 309 807 Merrill Lynch 241 852 Goldman Sachs 228 584 Morgan Stanley 220 661 RBS 214 712 Credit Suisse 205 682 UBS 204 867 January December 2008 Initial Offering Average Expenses on 1767 IPOs from 1990- 1994 Value of Issues ($mil) Direct Costs (%) Avg First Day Return (%) Total Costs (%) 2 - 9.99 16.96 16.36 10 - 19.99 11.63 9.65 20 - 39.99 9.7 12.48 40 - 59.99 8.72 13.65 60 - 79.99 8.2 11.31 80 - 99.99 7.91 8.91 100 - 199.99 7.06 7.16 200 - 499.99 6.53 5.70 500 and up 5.72 7.53 All Issues 11.00 12.05 2516 18 15 18 18 17 95 16 35 14 14 12 78 1110 10 36 18 69 ....
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This note was uploaded on 12/10/2011 for the course FIN 302 taught by Professor Kellybrunarski during the Spring '11 term at Miami University.

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Securities ch 13,15 (exam 3) - How Corporations Issue...

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