1.5.4 business forms - stock market

Question 1

what is stock market flotation?

Answer 1

occurs when a company becomes a plc and open its shares to the public

Question 2

how does a business become a plc?

Answer 2

• issue a prospectus to the company
• a minimum of £50,000 share capital has to be provided upfront
• a certificate will be shared
• the IPO goes live and the business can start trading on the stock market

Question 3

what are share prices?

Answer 3

Share prices are affected by the company’s performance and the businesses environment in which it trades

Question 4

what happens when share prices rise?

Answer 4

• company finds it easier to raise capital
• managers may receive a bonus
• consumers with shares feel more confident
• may receive positive publicity

Question 5

what happens when share prices fall?

Answer 5

• company may become vulnerable to take over
• harder to raise capital
• price fall gives an indication of poor performance
• consumers with shares feel less confident to spend

Question 6

what is a sleeping partner?

Answer 6

a person who invests money in a business but has no active role?

Question 7

what is meant by the term capital?

Answer 7

money invested by owners and shareholders

Question 8

what is the difference between a memorandum of association and articles of association?

Answer 8

documents created for the incorporation process.
the memorandum is company details.
articles of association is about the company running

Question 9

what is a social enterprise?

Answer 9

an organisation with a social objective