Public trading is potential loss or dilution of control

Assignment Help Financial Management

Reference no: EM131337908

Write a discussion response to the statement below:

Private companies, or closely held companies, are not publicly traded, which means that they do have common stock traded on an open marketplace. Because of this they are not required to disclose their financial information to the government, aside from tax returns, via the SEC. Conversely, publicly traded companies must disclose all financial information to the SEC and make it available for common stockholders. The advantage of public trading is the ability to raise funds through initial public offerings and these companies have limited liability. Also risk to the company is lower when equity financing is used since there is no contractual obligation to pay stock holders dividends. A disadvantage to public trading is the potential loss or dilution of control.

Reference no: EM131337908

Questions Cloud

What is the company pay-out ratio for the problem : What is the company’s pay-out ratio for the following problem: Pate & Co. has a capital budget of $3,000,000. The company wants to maintain a target capital structure that is 15% debt and 85% equity. The company forecasts that its net income this yea..

Prepare flexible budget for january production costs : Normal Volume per month is 40,000 direct labor hours. Beal’s January 2004 budget was based on normal volume. Prepare a flexible budget for January 2004 production costs, based on actual production of 7,800 units.

Pay to purchase one share of stock in lion equity today : Lion Equity paid an annual dividend of $3.25 per share last month, and it is anticipated that future dividends will increase by 4% annually. As a shareholder, if you require a 11% return on your investment in Lion Equity, how much are you willing pay..

An entrepreneur needs funds for a project : An entrepreneur needs funds for a project. She has funds of her own, but enough to cover the required investment of $100. If the entrepreneur doesnt misbehave, the project will succeed with probability .9, yielding a gross return of 120 in one year. ..

Public trading is potential loss or dilution of control : Private companies, or closely held companies, are not publicly traded, which means that they do have common stock traded on an open marketplace. Because of this they are not required to disclose their financial information to the government, aside fr..

Identify the legal rule that might apply in sarah case : Sarah is a college student who was late for class. She tried to cross the street in the middle of the block instead of at the intersection comer where a traffic light was in operation. A motorist hit her. Although Sarah placed herself in danger, she ..

Calculate required rate of return on a security with beta : The risk-free rate is 4% and the expected rate of return on the market portfolio is 9%. Calculate the required rate of return on a security with a beta of 1.28. If the security is expected to return 12%, is it overpriced or underpriced?

Hybrid cars are touted as green alternative : Hybrid cars are touted as a "green" alternative; however, the financial aspects of hybrid ownership are not as clear. Consider the 2014 Edsel 550h, which had a list price of $5,800 more than the comparable Edsel 550. Gasoline costs $3.40 per gallon a..

Required proceeds and number of shares offered : The Zuri Co. needs to raise $65.6 million to finance its expansion into new markets. The company will sell new shares of equity via a general cash offering to raise the needed funds. What are the required proceeds from the sale necessary for the comp..

User Account

All Pages