Question

Question text Which of the following is not a source of finance for new ventures? Select...

Question text Which of the following is not a source of finance for new ventures? Select one: a. Funds from venture capitalists b. Rights Issue c. Initial public offerings (IPO) d. Loans from banks

Homework Answers

Answer #1

The correct option is b. Rights Issue.

Reasons:

1. An rights issue is a right given by the company (note right not an obligation) to its existing shareholders to purchase additional shares of the company at a discount (Lower than markket price). Since in case of new venture the share holders are generally very limited in number and in their ability to put more money in the company, rights issue for a new venture is not possible.

2. Rights issue is generally made by those companies which have large number of shareholders since that increases the probability of raising capital through RIghts issue but since new venture have few shareholders in the begining RIghts Issue cannot be a source of finance for them.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
2.The initial public offering is what kind of public issue? Select one: a. Private issue b....
2.The initial public offering is what kind of public issue? Select one: a. Private issue b. Private placement c. Cash offer d. Rights offer 3. What is the best way for brand new and emerging firms to raise capital and grow their business? Select one: a. Applying for a loan from the bank which handles the firm’s accounts. b. Applying for a loan from local economic development agencies such as Invest Ottawa. c. Partnering with an underwriter to draft an...
Question text Which form of finance allows a company to raise funds by selling its accounts...
Question text Which form of finance allows a company to raise funds by selling its accounts receivable? Select one: a. Bank overdraft b. Wholesale finance c. Debtor finance d. Bridging finance
Flag question Question text Which of the following is FALSE? Select one: a. The cost to...
Flag question Question text Which of the following is FALSE? Select one: a. The cost to maturity that a firm pays on its existing bonds equals the rate of return required by the market. b. The cost of retained earnings is generally higher than both the cost of debt and cost of preferred stock. c. The net proceeds used in calculation of the cost of long-term debt are funds actually received from the sale after paying for flotation costs and...
A highly possible source of funding for a start-up and early business is: Select one: a....
A highly possible source of funding for a start-up and early business is: Select one: a. A) Venture capital and Private Placement. b. B) Personal savings and retained earnings. c. C) Personal savings and partners. d. D) IPO and Regulation A
Question text Which of the following best describes constrained optimization problem? Select one: a. A constrained...
Question text Which of the following best describes constrained optimization problem? Select one: a. A constrained optimization problem is an optimization problem that maintains a priority queue of variables, where the weight of a variable is the number of conflicts in which it participates. b. A constrained optimization problem is an optimization problem that also has hard constraints specifying which variable assignments are possible. The aim is to find an optimal assignment that satisfies the hard constraints. c. A constrained...
Which of the following statements is CORRECT concerning corporations’ raising capital in equity markets? A) Unsyndicated...
Which of the following statements is CORRECT concerning corporations’ raising capital in equity markets? A) Unsyndicated stock offerings are more expensive than syndicate offerings. B) Securities and Exchange Commission (SEC) controls margin requirements. C) The Federal Reserve Board regulates trading by corporate insiders. D) In a private placement, securities are offered to the public and must be registered with SEC E) Venture capitalists intend to sit on boards of companies they fund.
Which of the following statements is NOT CORRECT? a. When new stock is issued, the company...
Which of the following statements is NOT CORRECT? a. When new stock is issued, the company pays an investment bank to handle the expenses and fees involved with selling the stock. These expenses are called flotation costs. b. Flotation costs reduce the amount of capital the firm receives from a new stock issue. The company must make each dollar of the new issue work harder, so new investors earn their required rate of return. The new stock has a higher...
Which of the following entities is specialised in the investments in emerging businesses at the very...
Which of the following entities is specialised in the investments in emerging businesses at the very early stage in small deals? (Only one correct answer.) Select one: a. venture capital funds b. superannuation funds c. investment banks d. insurance companies
Tactics that venture capitalists use to reduce the risk of their investment include: Select one: A....
Tactics that venture capitalists use to reduce the risk of their investment include: Select one: A. funding the ventures in stages, requiring entrepreneurs to make no personal investments, syndicating investments, and maintaining in-depth knowledge about the industry in which they specialise. B. funding the ventures completely in the beginning, requiring entrepreneurs to make personal investments, syndicating investments, and maintaining in-depth knowledge about the industry in which they specialise. C. funding the ventures in stages, requiring entrepreneurs to make personal investments,...
26.Which of the following are duties that partners owe the partnership? Select all that apply. A....
26.Which of the following are duties that partners owe the partnership? Select all that apply. A. Duty of kindness. B. Duty of loyalty C. Duty of mainenance. D. Duty of faith and fair dealing. E. Duty of non-competition. F. Duty of sound business judgment. G. Duty to inform. H. Call of duty. 27.Select the best answer to complete the following phrase: Partnership property is owned by A. the partnership itself. B. all partners equally. C. the individual partner who provided...