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What are the two main expectations of people who buy shares?
What are the two main expectations of people who buy shares?
Which type of shares pays a fixed dividend before ordinary shareholders receive any dividends?
Which type of shares pays a fixed dividend before ordinary shareholders receive any dividends?
Which statement is true regarding ordinary shareholders' rights to dividends?
Which statement is true regarding ordinary shareholders' rights to dividends?
What does 'nominal (par) value' refer to?
What does 'nominal (par) value' refer to?
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What is a 'share premium'?
What is a 'share premium'?
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What is the 'spread' in the context of share trading?
What is the 'spread' in the context of share trading?
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Which type of shares generally lacks voting rights except in major company matters?
Which type of shares generally lacks voting rights except in major company matters?
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What does 'capital growth' refer to for an investor?
What does 'capital growth' refer to for an investor?
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What is an Initial Public Offering (IPO)?
What is an Initial Public Offering (IPO)?
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Which of the following best describes angel investors?
Which of the following best describes angel investors?
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What is one advantage of private equity compared to public equity?
What is one advantage of private equity compared to public equity?
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What are hedge funds primarily known for?
What are hedge funds primarily known for?
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Which type of funding is NOT typically associated with private equity?
Which type of funding is NOT typically associated with private equity?
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What can companies expect in return when issuing shares?
What can companies expect in return when issuing shares?
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Why might a company prefer private funding over going public?
Why might a company prefer private funding over going public?
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In the context of private equity, who are typically the investors?
In the context of private equity, who are typically the investors?
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What is one common method for private equity investors to exit their investment?
What is one common method for private equity investors to exit their investment?
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Which type of investors primarily participate in public equity markets?
Which type of investors primarily participate in public equity markets?
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Why do companies often pursue public equity through an IPO?
Why do companies often pursue public equity through an IPO?
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What is a significant disadvantage for companies that choose to go public instead of utilizing private equity?
What is a significant disadvantage for companies that choose to go public instead of utilizing private equity?
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What typically characterizes the types of companies that utilize public equity?
What typically characterizes the types of companies that utilize public equity?
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What is a requirement for a company that has gone public regarding shareholder control?
What is a requirement for a company that has gone public regarding shareholder control?
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What does private equity typically allow companies to avoid compared to going public?
What does private equity typically allow companies to avoid compared to going public?
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What is a notable benefit of investing in public equity for investors?
What is a notable benefit of investing in public equity for investors?
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What are some costs associated with listing on a stock exchange?
What are some costs associated with listing on a stock exchange?
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What is a key advantage of raising money through private equity compared to public equity?
What is a key advantage of raising money through private equity compared to public equity?
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How does going public affect a company's management decisions?
How does going public affect a company's management decisions?
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What does raising funds privately help a company avoid?
What does raising funds privately help a company avoid?
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Which statement correctly contrasts private and public equity?
Which statement correctly contrasts private and public equity?
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What disadvantage might a company face after going public?
What disadvantage might a company face after going public?
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What is a potential burden for companies that choose to go public?
What is a potential burden for companies that choose to go public?
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Which of the following is NOT a characteristic of private equity fundraising?
Which of the following is NOT a characteristic of private equity fundraising?
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What is one of the primary reasons a company might choose to go public?
What is one of the primary reasons a company might choose to go public?
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What is a consequence of being a public company?
What is a consequence of being a public company?
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What advantage does public equity provide to investors compared to private equity?
What advantage does public equity provide to investors compared to private equity?
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Why might a company prefer private equity over going public?
Why might a company prefer private equity over going public?
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What might be a negative impact of a company going public?
What might be a negative impact of a company going public?
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What can going public potentially help a company achieve in terms of employee attraction?
What can going public potentially help a company achieve in terms of employee attraction?
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What risk do public companies face that private companies typically do not?
What risk do public companies face that private companies typically do not?
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What is a disadvantage of private equity funding?
What is a disadvantage of private equity funding?
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What is a defining characteristic of private equity investments?
What is a defining characteristic of private equity investments?
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Why might a venture capitalist choose to invest in a startup?
Why might a venture capitalist choose to invest in a startup?
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What is a common criticism of hedge funds?
What is a common criticism of hedge funds?
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Which of the following is NOT a benefit of private equity over public offerings?
Which of the following is NOT a benefit of private equity over public offerings?
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How did the Global Financial Crisis affect venture capital investment in the UK?
How did the Global Financial Crisis affect venture capital investment in the UK?
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What is the purpose of short-selling in hedge funds?
What is the purpose of short-selling in hedge funds?
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What distinguishes venture capital from traditional private equity?
What distinguishes venture capital from traditional private equity?
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Why might companies prefer private equity funding?
Why might companies prefer private equity funding?
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Study Notes
Issuing Shares to Raise Money
- Companies issue shares to raise money, both public and private companies can sell shares.
- Investors expect profit through dividends (a portion of company profits) or capital growth (increase in share price).
- Dividends are typically paid out once or twice a year, depending on company performance and shareholder approval.
Types of Shares
Ordinary Shares
- Most common share type.
- Shareholders own part of the company, receiving a share of profits.
- Dividend payment is not automatic, but paid out after creditors (like banks).
- Shareholders have voting rights.
Preference Shares
- Also grant ownership, but have additional features.
- Fixed dividends are paid to shareholders before ordinary shareholders.
- Cumulative dividends are paid out from previous years before ordinary dividends.
- Preference shareholders usually have no voting rights except in major situations.
Share Value
Nominal (Par) Value
- The face value of a share, set when first issued. It is the minimum price.
- Share premium is earned if the selling price is above the nominal value.
Market Value
- Price at which shares are bought and sold in the market.
- Determined by supply and demand.
- Bid price: The price someone is willing to pay for a share.
- Offer price: The price someone is willing to sell a share for.
- Spread: The difference between the bid and offer prices.
Private Equity and Venture Capital
- Private equity is money invested in companies not publicly listed.
- Higher returns are expected for the higher risk.
- Venture Capital is a type of private equity for early/small businesses with high potential for growth.
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Description
Explore the fundamental concepts of issuing shares in companies, including ordinary and preference shares. Understand the impact of dividends and shareholder rights on capital growth and company profits. This quiz covers crucial financial principles for investors and corporate entities.
