 |  Fundamentals of Corporate Finance, 4/e Stephen A. Ross,
Massachusetts Institute of Technology
Randolph W. Westerfield,
University of Southern California
Bradford D. Jordan,
University of Kentucky
Gordon S. Roberts,
York University
Raising Capital
Learning ObjectivesAfter studying this chapter in the textbook, you should be able to:
| Explain the term venture capital and discuss the role that this method of financing plays in the early life cycle of a firm. |
| | | | Outline the procedure for a new security issue. |
| | | | List and discuss the various forms of underwriting new security issues. |
| | | | Give a possible explanation for the consistent underpricing of initial public offerings (IPOs). |
| | | | List the key components that account for the cost of issuing new securities. |
| | | | Explain what is meant by a rights offering and outline the steps involved in this method of offering a new issue of common stock. |
| | | | Compute the value of a right. |
| | | | Explain what is expected to happen to the price of a share of stock on the ex rights day. |
| | | | Explain how existing shareholders are affected by a rights offering. |
| | | | Define the term dilution and explain its effects on share prices. |
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2002 McGraw-Hill Higher Education