MBA 615:MANAGERIAL FIN.>CUSTOM PKG.<
16th Edition
ISBN: 9781323568736
Author: Pearson Custom
Publisher: PEARSON C
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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
MBA 615:MANAGERIAL FIN.>CUSTOM PKG.<
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 - Prob. 13PCh. 23 - Prob. 14PCh. 23 - Prob. 15PCh. 23 - Prob. 16PCh. 23 - Prob. 17P
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- Identify problems that occur when estimating the cost of capital fora privately held firm. What are some solutions to these problems?arrow_forwardWhen valuing private companies, we use public companies as comparables to gain insights into how the capital markets assess the riskiness of the private company’s business. Are there any potential caveats to this approach?arrow_forwardWhile determining which companies will receive capital, what information do investors and creditors needs?arrow_forward
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