CM Group 6

It deals with how businesses raise capital to fund their operations, investments, and growth.

• Corporate financing

• Equity financing

• Hybrid financing

• Sources of capital

Raising capital by issuing shares to investors. Investors gain ownership in the company and are entitled to dividends and potential capital gains.

• Corporate financing

• Equity financing

• Hybrid financing

• Sources of capital

It is a mix of debt and equity, such as convertible bonds or preferred shares.

• Hybrid financing

• Corporate financing

• Equity financing

• Sources of capital

Borrowing money through loans or issuing bonds. Companies must pay interest and repay the principal, but debt does not dilute ownership.

• Debt financing

• Sources of capital

• Equity financing

• Hybrid financing

The mix of debt and equity that a company uses to finance its operations and growth.

• Capital structure

• Optimal structure

• Debt structure

• Financial structure

The best mix of debt and equity that minimizes the cost of capital and maximizes firm value.

• Financial structure

• Debt structure

• Optimal Capital Structure

• Capital structure

One of the factors that influences the optimal structures.

• Lower risk firms tend to use less debt.

• Higher risk firms tend to use less debt.

• Lower tax rates make debt more attractive.

• Mid tax rates make debt more attractive.

The ________ suggests firms prefer to use retained earnings as the primary source of financing.

• Trade-Off Theory

• Financial firm

• Sources of capital

• The pecking order theory

_____ is seen as a last resort, as it signals to the market that the firm's stock is undervalued.

• Equity

• Asset

• Liability

• Capital

What is an Initial Public Offering (IPO)?

• A company selling its existing shares to the public

• A company offering its shares to the public for the first time

• A private sale of shares to select investors

• A type of bond issuance