I. Define and distinguish between a:
a. Rights Issue and Share Issue.
Rights issue is an issue of shares to existing shareholders in proportion to
their existing shareholding where they have the right to purchase these shares
at a lower subscription price than the market price. This protects their
proportionate interests in the company.
Raising of funds from the issue of ordinary or preference shares directly to the
public i.e. IPO or private placement, or rights issue or dividend reinvestment
b. Primary Market and Secondary Market.
Primary Market – a market for new issues of securities where the cash
proceeds go to the issuer of the securities
Secondary Market – the market where previously issued securities are traded
II. What do the following acronyms stand for:
a. IPO Initial Public Offering
b. ASX Australian Stock Exchange
III. Define the following terms
a. Market Capitalisation The total market value of all the shares of a
company on issue. A direct measure of the total wealth of
shareholders that is invested in the company
b. Financial Asset A claim to a series of cash flows against some
economic unit. For eg A bank account or a share in a company