EBK FINANCIAL MANAGEMENT: THEORY & PRAC
15th Edition
ISBN: 9781305886902
Author: EHRHARDT
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 18, Problem 2Q
Summary Introduction
To determine: The reason due to which firms decide to opt for public issue.
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Many companies that go public with an IPO don’t actually need additional cashto continue growing their operations. Why might such a firm decide to go public?
Which of the following is an incentive for firms to conduct an IPO?
Underwriter and advisor fees are typically substantial.
Venture capitalists will be more able to sell their shares.
Reporting requirements are more stringent for public companies.
The company may become subject to a hostile takeover.
Why investors are willing to invest in high-tech firms instead of conventional financial sources?
Chapter 18 Solutions
EBK FINANCIAL MANAGEMENT: THEORY & PRAC
Ch. 18 - Prob. 1QCh. 18 - Prob. 2QCh. 18 - Prob. 3QCh. 18 - Prob. 4QCh. 18 - Prob. 5QCh. 18 - Prob. 1PCh. 18 - Prob. 2PCh. 18 - Prob. 3PCh. 18 - Bynum and Crumpton, a small jewelry manufacturer,...Ch. 18 - Prob. 5P
Ch. 18 - Prob. 8SPCh. 18 - Prob. 1MCCh. 18 - Prob. 2MCCh. 18 - Prob. 3MCCh. 18 - Prob. 4MCCh. 18 - Randy’s, a family-owned restaurant chain operating...Ch. 18 - Prob. 6MCCh. 18 - Prob. 7MCCh. 18 - Prob. 8MCCh. 18 - Prob. 9MCCh. 18 - Randy’s, a family-owned restaurant chain operating...Ch. 18 - Randys, a family-owned restaurant chain operating...Ch. 18 - Randy’s, a family-owned restaurant chain operating...Ch. 18 - Randy’s, a family-owned restaurant chain operating...Ch. 18 - Prob. 14MCCh. 18 - Prob. 15MCCh. 18 - Prob. 16MCCh. 18 - Prob. 17MCCh. 18 - Prob. 18MC
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- Which of the following statements is NOT true about Initial Public Offerings? A. An IPO occurs when a private company sells stock to the public for the first timeB. IPOs are less risky than a typical stock market investment since they are typically smaller companiesC. When an IPO occurs, a company raises money from public investors that they use to grow their businessD. IPOs are risky investments since the company going public often has a limited track record of performancearrow_forwardWhat are the basic arguments for increasing capital requirements at large commercial banks? In what ways will depositors, stockholders, and society in general benefit? How might each group be disadvantaged? As commercial banks enter new lines of business such as brokerage, how much additional capital should be required? Should these new lines of business be insured by the FDIC? Why or why not? Give examples from today’s financial marketplace.arrow_forward• When looking to invest corporate dollars, is the top-down approach is preferred over the bottom-up approach? Why or why not?arrow_forward
- Which of the following is not a financing decision? A Should the firm borrow money from a bank or sell bonds? B Should the firm shut down an unprofitable factory? C Should the firm buy or lease a new machine that it is committed to acquiring? D Should the firm issue preferred stock or common stock?arrow_forwardWhat would be the answerarrow_forwardWhy would it be desirable to switch from an S corporation to C corporation once the business is growing fast?arrow_forward
- What is meant by the goal of maximization of shareholder wealth? The government has passed regulations that require pollution controls, development restrictions, and pay equity over the years. But, can a firm still achieve the maximization of shareholder wealth? How?arrow_forwardIn times of crisis companies are often seen to be paying stable dividends. The question however is, should companies retain these dividends in the firm to protect employment and investments? Should companies preserve their financial flexibility in times of financial crises? Discuss the ethics of dividends and illustrate how dividends and related issues (e.g. dividend taxation) can play a part in rethinking the capitalist paradigm.arrow_forwardExamine the reasons as to why investment banks achieve high levels profits and why large profits cause controversy with the public? Explain.arrow_forward
- Can a firm still achieve the maximization of shareholders' wealth even if the government has passed regulations that require pollution controls, development restrictions, and pay equity over the years? how?arrow_forwardYour corporation needs additional capital to fund an expansion. Discuss the advantages and disadvantages of raising capital through the issuance of stock. Would debt be a better option? Why or why not?arrow_forwardWhy would a company decide to pay investors cash? What are the two ways to give cash back to investors and talk about the trade-off of those two regarding: Tax considerations Share price support/signaling Flexibility Offset dilution Clientele effect, smoothing PLEASE HELP, THANK YOŮ SO MUCH!!arrow_forward
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