Joyce has never invested in shares before. She has come to you, as a prospective finance graduate, for some advice. In your conversations with Joyce, you have determined her Required Rate of Return (RRR) to be 8.75%.
Joyce has never invested in shares before. She has come to you, as a prospective finance graduate, for some advice. In your conversations with Joyce, you have determined her Required
d) Joyce decided to buy 200 000 shares in GGG Ltd., giving her 2% ownership in the company (GGG Ltd. currently has 10 000 000 issued shares). One year later, GGG Ltd. announces a private placement of a further 10,000,000 shares, in order to raise funds for their new venture: Project COVID.
(i) Describe two features of a private placement of shares.
(ii) What is the major disadvantage to Joyce of the above private placement? Include in your answer the effect on her ownership.
(iii) Identify one other source of equity funding Joyce, as a shareholder, would prefer. Justify your choice.
Step by step
Solved in 3 steps
