What are the principal benefits of going public? What are the key drawbacks?
Answer to relevant QuestionsDistinguish between an equity carve-out and a spin-off. How might a spin-off create value for share-holders? Nippon Computer Manufacturing Company (NCM) wants to create a sponsored ADR program, worth $250 million, to trade its shares on NASDAQ. Assume that NCM is currently selling on the Tokyo Stock Exchange for ¥1,550 per share, ...What is the fundamental principle of financial lever-age? How does it pertain to the reasons why managers may choose to substitute debt for equity in their firm’s capital structure? How do stock prices generally react to announcements of firms’ changes in leverage? Why is this result perplexing and seemingly contradictory given your answer to Question 12-2? A problem with collateral is that its value is positively correlated with the borrower’s ability to repay. Explain.
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