Discuss How a Listed Firm Can Raise Additional Equity Capital

question 49

Essay

Discuss how a listed firm can raise additional equity capital.Explain the circumstances in which a firm would choose a rights issue, explain how this process is conducted and refer to the risks involved.

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Definitions:

Beta

A measurement of a stock's volatility in relation to the overall market, indicating its risk compared to the market average.

Total Risk

The complete set of risks associated with an investment, including both systematic and unsystematic risks.

Systematic Risk

Refers to the risk inherent to the entire market or market segment that cannot be mitigated through diversification.

Unsystematic Risk

The danger linked to a particular corporation or sector that can be minimized by spreading investments.