The introduction in 1981 of shelf registration of securities
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How do you think each of the following items would affect a company’s ability to attract new capital and the flotation costs involved in doing so? How do you think each of the following items would affect a company’s ability to attract new capital and the flotation costs involved in doing so? How do you think each of the following items would affect a company’s ability to attract new capital and the flotation costs involved in doing so? How do you think each of the following items would affect a company’s ability to attract new capital and the flotation costs involved in doing so? How do you think each of the following items would affect a company’s ability to attract new capital and the flotation costs involved in doing so? |
Explanation
Increase in institutionalization implies an increase in willingness of investors to invest in securities for the purpose of fund management. So, the securities are frequently applied without the requirement of an underwriter or agent which indicates an increase in the company’s capital and reduction in its flotation cost.
Verified Answer
Increase in institutionalization will improve the company’s ability to attract new capital and decrease the floatation cost.
Explanation
Increase in institutionalization implies an increase in willingness of investors to invest in securities for the purpose of fund management. So, the securities are frequently applied without the requirement of an underwriter or agent which indicates an increase in the company’s capital and reduction in its flotation cost.
Verified Answer
Increase in institutionalization will improve the company’s ability to attract new capital and decrease the floatation cost.
Explanation
Financial conglomerates often provide attractive as well as profitable offers with financial securities and portfolios as compared to banking houses. So, the investors are pleased to invest in securities of financial conglomerates that results in an increase in the company’s ability to attract new capital and reduce its flotation cost.
Verified Answer
Financial conglomerates helps a company to improve its ability to raise capital and reduces the flotation cost.
Explanation
Elimination of preemptive rights might affect the existing shareholders adversely as they are not given preference over other investors while issuing new capital. Moreover, they can withdraw their investment in the firm but it may not affect the company’s ability to attract new investors and flotation cost.
Verified Answer
Elimination of preemptive rights may not affect the company’s ability to raise new capital and its flotation cost.
Explanation
Introduction of shelf registration of securities induces registration of few offers of securities together. Thus, it reduces the registration, listing and other costs incurred by the company which in turn reduces its flotation cost and enhances the company’s ability to attract new capital.
Verified Answer
Introduction of shelf registration reduces the flotation cost and enhances the company’s ability to attract new capital.
