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What are three U

Business

What are three U.S. stock exchanges where equities are publicly traded? Why may a stock split not be of great value to existing shareholders? How can a dividend policy be amended to address shareholders' expectations of increasing returns.

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What are some of the sources companies can turn to for venture capital funding? What analytical questions will be at the top of VC's due diligence list prior to offering capital to early-stage firms? How will VC's realize their return on investment over the life of an investment in a firm?

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Three US stock exchanges are NYSE, NASDAQ and AMEX.

A stock split may not be of great value to existing shareholders as even though it increases the number of shares held by a shareholder, the overall value of shares remain the same as price of the stock being traded on the exchange is reduced in proportion to the split ratio. For example, if a stock is split into 2 and is being traded at $100 on the exchange, the post split price will become $50. Thus, the total value of the 2 shares held by the shareholder will still remain $100.

A company can start paying higher dividend yield in order to make it stock more appealing to the investors or shareholders. It will obviously reduce the reserves being held by the firm as it will distribute more to its shareholders than before. However, it will appear more attractive to investors who believe that a company paying higher dividend is more profitable and excellent option to invest. Although the ex dividend price of the share will reflect this increased dividend yield by reducing the value of the shares by the amount of dividend being paid, it will still be beneficial in terms of addressing shareholder's expectations of increasing returns.

What are some of the sources companies can turn to for venture capital funding? What analytical questions will be at the top of VC's due diligence list prior to offering capital to early-stage firms? How will VC's realize their return on investment over the life of an investment in a firm?

Some of the source for seeking venture capital financing are:

Venture Capital funds or private equity funds

High Networth individuals

Financial institutions such as banks which provide venture capital

Some of the analytical questions that will be at the top of VC's due dilligence are debt-equity ratio of the company, cost of capital, Retun on Equity, Operating margins, Revenue/Sales and profitability growth, Asset base,etc.

VC's realize their return on investment over the life of an investment by taking dividends. Generally, VC prefer to exit part of their investments or in full either via Initial Public Offer, stake sale to another strategic investor or buy back by the promoters itself.

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