EBK CORPORATE FINANCE
4th Edition
ISBN: 9780134202785
Author: DeMarzo
Publisher: VST
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Question
Chapter 23, Problem 1P
Summary Introduction
To determine: The alternative sources from which private companies can raise equity capital.
Introduction:
Equity capital is the portion of the firm capital; these capital funds are paid into a business firm by an investor in exchange for shares of ownership in the company.
Expert Solution & Answer
Explanation of Solution
The alternative sources from which private companies can raise equity capital are as follows:
- Venture capitalist: An investor who provides capital to a start-up business firm or gives their support to small companies to expand their business is a venture capitalist.
- Institutional investor: Institution investors are those organizations which invest on the behalf of the investor. These institutions are investment banks, money managers, hedge-fund investors, commercial trusts, and various others.
- Angel investor: An investor who provides the capital for a start-up business firm, usually in exchange for convertible debt or ownership equity is an angel investor.
- Corporate investors: A company that invests in other companies to control the business and increase their profit is a corporate investor.
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Chapter 23 Solutions
EBK CORPORATE FINANCE
Ch. 23.1 - Prob. 1CCCh. 23.1 - Prob. 2CCCh. 23.2 - Prob. 1CCCh. 23.2 - Prob. 2CCCh. 23.3 - List and discuss four characteristics about IPOs...Ch. 23.3 - Prob. 2CCCh. 23.4 - Prob. 1CCCh. 23.4 - What is the average stock price reaction to an...Ch. 23 - Prob. 1PCh. 23 - What are the advantages and the disadvantages to a...
Ch. 23 - Prob. 3PCh. 23 - Suppose venture capital firm GSB partners raised...Ch. 23 - Prob. 5PCh. 23 - Prob. 6PCh. 23 - Prob. 7PCh. 23 - Prob. 8PCh. 23 - Prob. 9PCh. 23 - Prob. 10PCh. 23 - Prob. 11PCh. 23 - Prob. 12PCh. 23 - What is IPO underpricing? If you decide to try to...Ch. 23 - Prob. 14PCh. 23 - Prob. 15PCh. 23 - Prob. 16PCh. 23 - Prob. 17PCh. 23 - Prob. 18PCh. 23 - Prob. 19PCh. 23 - Prob. 20P
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Similar questions
- While determining which companies will receive capital, what information do investors and creditors needs?arrow_forwardWhat is "dry powder" considered in Private Equity? interest rate movement O capital available to deploy O platform for firmsarrow_forwardHow do private equity firms get paid?arrow_forward
- In financing their operations, corporations have the options of raising capital by issuing stock or debt or both. What are the benefits of using the two sources and what are the risks with each of them?arrow_forwardWhat are the advantages and disadvantages of a company raising capital through the issuance of equitiesarrow_forwardDescribe some ways other than an IPO thatcompanies can use to raise funds from the capitalmarkets.arrow_forward
- What are the objectives of the firm in raising capital through external sources and how are these objectives me?arrow_forwardWhat is the role of investment banks and how can they help companies raise capital?arrow_forwardHow does a semi-strong market affect a company’s capital structure? Discuss the possible exposures and impact. Provide examples to justify your reasoning.arrow_forward
- What is the impact on stockholders equity when a company uses equity financing as a source of funding?arrow_forwardWhat is the impact on stockholders equity when a company uses debt financing as a source of funding?arrow_forwardWhat benefits is available to investors in a dividend reinvestment plan? How might the firm benefit?arrow_forward
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