Topic 4 - Equity finance

Question 1

What should be considered when looking at cost of funding and comparing debt vs equity?

Answer 1

Question 2

What should be considered when looking at duration of funding and comparing debt vs equity?

Answer 2

Question 3

What should be considered regarding restrictions on finance?

Answer 3

Question 4

What should be considered re gearing level?

Answer 4

Question 5

Why is it important to consider the impact of debt/equity decisions on the financial statements?

Answer 5

Question 6

Why is it important to consider the currency of expected cashflows from the project?

Answer 6

Question 7

What is important to consider re the availability of funding?

Answer 7

Question 8

Define a share and equity finance;

Answer 8

Question 9

Define ordinary shares;

Answer 9

Question 10

Define preference shares;

Answer 10

Question 11

What are the 4 types of preference shares;

Answer 11

Question 12

What are the primary and secondary functions of the capital markets;

Answer 12

Question 13

What are the 2 capital markets in the UK called;

Answer 13

Question 14

Describe an IPO;

Answer 14

Question 15

Describe an offer for sale by tender;

Answer 15

Question 16

Describe a placing;

Answer 16

Question 17

What are the 3 main types of advisors to an IPO;

Answer 17

Question 18

What are the advantages and disadvantages of a stock exchange listing;

Answer 18

Question 19

What are the key features of a rights issue;

Answer 19

Question 20

What are the 3 elements to calculate with a rights issue;

Answer 20

Question 21

How is TERP calculated?

Answer 21

Question 22

How is yield adjusted TERP calculated?

Answer 22

Question 23

What are a shareholders options when offered a rights issue?

Answer 23

Question 24

What are the implications of a rights issue from the shareholder perspective?

Answer 24

Question 25

What are the implications of a rights issue from the company’s perspective?

Answer 25