Equity Capital Market (ECM) and IPOs Quiz

Questions and Answers

What is the purpose of Equity Capital Market (ECM)?

To allow private companies to finance themselves with equity on financial markets

What are shares?

Equity securities that represent a fraction of a company's capital and give owners rights to receive dividends, vote, and influence the company's policy

What are some reasons to use ECM?

IPOs, capital increases, sales of shares, issue of convertible bonds, and compulsory withdrawal

What are the different types of shares?

Ordinary and preference shares, and they can be listed or unlisted, bearer or registered Signup and view all the answers

What is the difference between bearer and registered shares?

Bearer shares are more common and traded on the stock exchange, while registered shares result in shareholders being registered in the legal registers of the company Signup and view all the answers

What are BSPCE, BSA, Free Shares, and stock options?

Share capital incentive mechanisms that involve employees in the capital of the company Signup and view all the answers

What is the primary market?

When a company first issues shares Signup and view all the answers

What is a successful IPO?

One that can raise a considerable amount of capital and increase a company's exposure and public image Signup and view all the answers

What are corporate actions?

Events that occur in the life of a financial instrument, such as payment of dividends or capital increase Signup and view all the answers

Study Notes

Equity Capital Market (ECM) allows private companies to finance themselves with equity on financial markets
Shares are equity securities that represent a fraction of a company's capital and give owners rights to receive dividends, vote, and influence the company's policy
Reasons to use ECM include IPOs, capital increases, sales of shares, issue of convertible bonds, and compulsory withdrawal
There are different types of shares, including ordinary and preference shares, and they can be listed or unlisted, bearer or registered
Companies can define their own classes of stock, and some shares may provide financial benefits without voting rights
Bearer shares are more common and traded on the stock exchange, while registered shares result in shareholders being registered in the legal registers of the company
BSPCE, BSA, Free Shares, and stock options are share capital incentive mechanisms that involve employees in the capital of the company
The confrontation between supply and demand for shares takes place on stock markets, which are organized and monitored by entities such as Euronext and the Autorité des marchés financiers (AMF)
The primary market is when a company first issues shares, while the secondary market is when trading begins between investors
Shareholders have rights to remuneration, information, voting, and ownership over the asset, but in the event of bankruptcy, they are the last served after creditors and tax authorities.
Corporate actions are events that occur in the life of a financial instrument, such as payment of dividends or capital increase.
There are two types of corporate actions: simple and complex.
Simple corporate actions are carried out automatically without the bearer being consulted.
Complex corporate actions require the bearer to provide a specific response.
IPO is the first listing of a company on a stock market, which provides financing and increases notoriety.
Companies seek to go public for various reasons, including funding for growth and balance sheet consolidation.
Investment banks set the price of an IPO and release an initial share price for public trading.
A successful IPO can raise a considerable amount of capital and increase a company's exposure and public image.
Publicly listed companies are subject to government rules and regulations and must be transparent about financial statements.
Different types of IPOs include Outright Offer, Offer at Minimum Price, and Open Price Offer.