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Questions and Answers
What is the definition of Debt Capital?
What is the definition of Debt Capital?
- Short-term financing instruments with a maturity of less than one year
- Money raised by issuing shares in the company
- Borrowed money appearing as a capital asset on the balance sheet (correct)
- Money needed to meet the day-to-day operation of the business
What is the purpose of Equity Capital?
What is the purpose of Equity Capital?
- To meet the day-to-day operation of the business
- To raise funds for short-term financing instruments
- To fund the expansion of the business (correct)
- To buy Treasury Bills in the money market
What are examples of Money Market instruments?
What are examples of Money Market instruments?
- Intellectual property patents
- Factory and its machinery
- Real estate products
- Short-term certificates of deposit (CDs) (correct)
Who can buy Treasury Bills in the money market?
Who can buy Treasury Bills in the money market?
What type of financing involves trading longer-term financing instruments such as mortgages, bonds, and stocks, influencing long-term financing rates in real estate?
What type of financing involves trading longer-term financing instruments such as mortgages, bonds, and stocks, influencing long-term financing rates in real estate?
What do Real Estate Investment Trusts (REITs) provide for real estate companies?
What do Real Estate Investment Trusts (REITs) provide for real estate companies?
What represents the amount of money returned to shareholders if all assets were liquidated?
What represents the amount of money returned to shareholders if all assets were liquidated?
What is the crucial factor in debt financing?
What is the crucial factor in debt financing?
What do some real estate developers issue to raise capital, with investors receiving principal amount plus interest upon maturity?
What do some real estate developers issue to raise capital, with investors receiving principal amount plus interest upon maturity?
What is used by real estate companies to raise short-term capital, with investors receiving interest income upon maturity?
What is used by real estate companies to raise short-term capital, with investors receiving interest income upon maturity?
What type of financing involves borrowing money and paying it back with interest, commonly in the form of a loan?
What type of financing involves borrowing money and paying it back with interest, commonly in the form of a loan?
What do Real Estate companies seek from banks for immediate financial needs?
What do Real Estate companies seek from banks for immediate financial needs?
What involves raising capital through selling shares to the public, making investors partial owners?
What involves raising capital through selling shares to the public, making investors partial owners?
What type of financing can be acquired through borrowing from private or government sources?
What type of financing can be acquired through borrowing from private or government sources?
What do some real estate companies use to raise capital by issuing short-term debt securities?
What do some real estate companies use to raise capital by issuing short-term debt securities?
What type of financing involves creating diversified portfolios of properties to raise capital?
What type of financing involves creating diversified portfolios of properties to raise capital?
What stage do venture capitalists typically exit at to reap profits?
What stage do venture capitalists typically exit at to reap profits?
In which stage of development do Initial Public Offerings (IPOs) occur?
In which stage of development do Initial Public Offerings (IPOs) occur?
What is the primary purpose of crowdfunding in real estate financing?
What is the primary purpose of crowdfunding in real estate financing?
What does syndication involve in real estate financing?
What does syndication involve in real estate financing?
What is a significant advantage of pre-selling as a marketing strategy for developers?
What is a significant advantage of pre-selling as a marketing strategy for developers?
What type of real estate projects do life insurance companies prefer?
What type of real estate projects do life insurance companies prefer?
What is the security for real estate mortgage loans provided by life insurance companies?
What is the security for real estate mortgage loans provided by life insurance companies?
What are real estate mortgage loan amounts limited by?
What are real estate mortgage loan amounts limited by?
When is approval by the Commissioner required for loans secured by mortgages on improved real estate?
When is approval by the Commissioner required for loans secured by mortgages on improved real estate?
Under what regulation are insurance companies engaged in real estate lending?
Under what regulation are insurance companies engaged in real estate lending?
What is the primary purpose of insurance contracts in real estate financing?
What is the primary purpose of insurance contracts in real estate financing?
Which type of equity capital focuses on high-growth potential businesses?
Which type of equity capital focuses on high-growth potential businesses?
What is the impact of equity financing on the company's financial burden?
What is the impact of equity financing on the company's financial burden?
What is the primary advantage of equity financing?
What is the primary advantage of equity financing?
What type of financing involves individual investors, angel investors, and venture capitalists?
What type of financing involves individual investors, angel investors, and venture capitalists?
What represents the role of angel investors in equity financing?
What represents the role of angel investors in equity financing?
What do venture capitalists primarily evaluate when considering businesses for investment?
What do venture capitalists primarily evaluate when considering businesses for investment?
What is the primary limitation of individual investors in equity financing?
What is the primary limitation of individual investors in equity financing?
What type of financing does not require repayment of the capital acquired?
What type of financing does not require repayment of the capital acquired?
What do pre-need plans primarily cover?
What do pre-need plans primarily cover?
What is the primary purpose of the trust fund in pre-need plans?
What is the primary purpose of the trust fund in pre-need plans?
What is the primary requirement for pre-need companies in investing the trust fund?
What is the primary requirement for pre-need companies in investing the trust fund?
What type of equity capital involves partial ownership by investors?
What type of equity capital involves partial ownership by investors?
What types of plans are covered under RA 9828?
What types of plans are covered under RA 9828?
What are the limitations for direct loans from the trust fund of a pre-need company?
What are the limitations for direct loans from the trust fund of a pre-need company?
What is the maximum recorded value of real estate investment allowed for a pre-need company?
What is the maximum recorded value of real estate investment allowed for a pre-need company?
What are the different forms in which equity capital can come?
What are the different forms in which equity capital can come?
What is the advantage of equity financing over debt financing?
What is the advantage of equity financing over debt financing?
What distinguishes public equity from private equity?
What distinguishes public equity from private equity?
What is the role of individual investors in equity financing?
What is the role of individual investors in equity financing?
What distinguishes angel investors from individual investors?
What distinguishes angel investors from individual investors?
What is the main advantage of equity financing over debt financing?
What is the main advantage of equity financing over debt financing?
What distinguishes venture capitalists from angel investors?
What distinguishes venture capitalists from angel investors?
What is the role of venture capitalists in equity financing?
What is the role of venture capitalists in equity financing?
Which type of real estate project do life insurance companies prefer?
Which type of real estate project do life insurance companies prefer?
What is the maximum recorded value of real estate investment allowed for a pre-need company?
What is the maximum recorded value of real estate investment allowed for a pre-need company?
Under what regulation are insurance companies engaged in real estate lending?
Under what regulation are insurance companies engaged in real estate lending?
What represents the role of angel investors in equity financing?
What represents the role of angel investors in equity financing?
What is the primary purpose of the trust fund in pre-need plans?
What is the primary purpose of the trust fund in pre-need plans?
What is the primary advantage of equity financing over debt financing?
What is the primary advantage of equity financing over debt financing?
What is the primary limitation of individual investors in equity financing?
What is the primary limitation of individual investors in equity financing?
What is the primary purpose of insurance contracts in real estate financing?
What is the primary purpose of insurance contracts in real estate financing?
What do Real Estate Investment Trusts (REITs) provide for real estate companies?
What do Real Estate Investment Trusts (REITs) provide for real estate companies?
What is the primary requirement for pre-need companies in investing the trust fund?
What is the primary requirement for pre-need companies in investing the trust fund?
What is the impact of equity financing on the company's financial burden?
What is the impact of equity financing on the company's financial burden?
What type of financing involves creating diversified portfolios of properties to raise capital?
What type of financing involves creating diversified portfolios of properties to raise capital?
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Study Notes
Real Estate Financing and Investment Options
- Venture capitalists demand a significant share of ownership in a business for their financial investment, resources, and connections, often insisting on involvement in managing a company's activities.
- Venture capitalists typically get involved early and exit at the IPO stage to reap profits.
- Initial Public Offerings (IPOs) involve selling company stock shares to the public to raise funds, occurring in a later stage of development.
- Crowdfunding allows individual investors to invest small amounts via online platforms to help a company reach financial goals.
- Syndication involves pooling funds of developers and other investors to create a separate company for a specific project, with Joint Ventures (JVs) being a common approach.
- Pre-selling is a successful marketing strategy for developers, allowing them to generate revenue before project completion, but buyers face the risk of project failure.
- Insurance companies engage in real estate lending as an investment, with life insurance companies preferring larger real estate projects and insisting on equity positions in projects they finance.
- Life insurance companies may lend to policyholders using the value of their policy as security, with specific regulations on real estate mortgage loans.
- Real estate mortgage loans have limitations on loan amounts based on the appraised or market value of the property and maturity period.
- Approval by the Commissioner is required for loans secured by mortgages on improved real estate if the improvements do not belong to the landowner.
- Insurance companies are regulated under RA 10607, which defines their activities, including making insurance contracts and reinsurance business.
- Insurance contracts involve one party indemnifying another against loss, damage, or liability arising from an unknown or contingent event.
Pre-Need Plans and Equity Financing
- Definition of pre-need plans, including types of plans and coverage
- List of pre-need companies with certificates of authority for licensing year 2023
- Investment of the trust fund by pre-need companies, including limitations and requirements
- Types of equity capital, including private equity, public equity, and real estate equity
- Explanation of equity financing and its advantages, such as no obligation to repay the capital acquired
- Impact of equity financing on the company's financial burden and available capital for investment
- Requirement to share profits and consult with equity investors for decisions affecting the company
- Types of equity financing, including individual investors, angel investors, and venture capitalists
- Characteristics and limitations of individual investors, such as needing more investors to reach financing goals
- Role and contributions of angel investors, including their industry experience, connections, and advice
- Characteristics of venture capitalists, such as making substantial investments and focusing on high-growth potential businesses
- Key factors for venture capitalists when evaluating businesses, including competitive advantages and prospects for success
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