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Important Points for Shareholders and Creditors
1. In raising capital, the borrowing firm will constantly question the financial securities in form of preference shares, ordinary shares, debentures, bond etc.
2. In case of bondholders and shareholders the agent is the shareholder who must ensure such the debt capital borrowed is effectively operated without decrease in the wealth of the bondholders. Such bondholders are the principal whose wealth is influenced through the number of the bond and the value of bonds held.
3. Wealth of bondholders = Market value of bonds x No. of bonds /debentures held.
4. An agency conflict or problem of interest between the shareholders (agents) and the bondholders (principal) will arise whenever shareholders take action that will decrease the market value of the bond and through extension, the wealth of the bondholders.
Advantages of Floatation of New Shares 1. It facilitates the matter of securities to increase new finance, creation a company less dependent on retained earnings and banks.
Differences between Equity Finance and Preference Dissimilarity between Equity Finance and Preference are as follows: Ordinary share capital
how much
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At the end of the fiscal year ending June 30, 2003, Microsoft reported common equity of $64.9 billion on its balance sheet, with $49.0 billion invested in financial assets (in the
WHy does most interbank currency trading worldwide involve the US dollar?"
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Definition of 'Capital Budgeting': The process in which a business calculates whether projects such as building a new plant or investing in a long-term risk are worth pursuing
Holding Company Such holds more than a half of the equity share capital of other company or is a member and or controls a big percentage of Directors of the Board of one or mo
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