1.5.4 Stock market flotation

Question 1

Stock market flotation

Answer 1

The process of a company ‘going public’ - making shares available to the public for the first time

Question 2

Stock market flotation is AKA

Answer 2

IPO

Question 3

The stock market flotation is expensive and time consuming T/F

Answer 3

TRUE

Question 4

when undertaking an ipo great adminsitrative work is needed e.g invesemtnet bank

Answer 4

GO back to this section, handwriting unclear

Question 5

One of the first jobs when undertaking an IPO is to publish a what

Answer 5

publish a prospectus

Question 6

Prospectus

Answer 6

a detailed document that advertises the company to potential investors and invites them to buy shares

Question 7

A prospectus is likely to contain…

Answer 7

things about the business

things for the shareholders to knows

Question 8

“Things about the business”example

Linked to prospectus

Answer 8

• brief history of business
• description of operations
• how money will be spent
• Companies future strategy

Question 9

‘Things for the shareholders to know” example

Answer 9

• details of possible risks to investors
• information about how to buy shares
• Application for to buy shares

Question 10

Why is ‘going public’ expensive

Answer 10

• companies need lawyers to ensure that prospectus is ‘legally’ correct
• company will have advertising/administrative expenses
• Company must have a minimum of £50,000 share capital.