Financial Management : Part-4

Short Notes: Financial Management (Part-4)

» What is stock split?
Answer: A stock split is a method commonly used to lower the market price of a firm s stock by increasing the number of shares belonging to each stockholder.

» What is bird in hand argument?
Answer: The brief, in support of dividend relevance theory, that investors see current dividends as less risky than future dividends or capital gains.

» What is secondary market?
Answer: secondary market is the market in which existing, already outstanding securities are traded among investors. In secondary market, the original issuer has no part in the transaction.

» What are best efforts offering?
Answer: Best efforts offering Instead of underwriting a securities issue, investment bankers may sell the issue on a best efforts offering basis.

» What is Initial public offering?
Answer: Initial public offering is the new firm is successful the owners may want to take the company public with a sale of common stock to outside.

» What is money market?
Answer: A financial relationship created between suppliers of fund and demanders of short-term funds.

» What is private placement?
Answer: A private placement is the sale of stock to only one or a few investors, usually institutional investors.

» Define zero coupon bonds?
Answer: A zero-coupon is a bond brought at a price lower than its face value, with the face value repaid at Ale time of maturity.

» What is sale and leaseback?
Answer: Under the sale and leaseback arrangement, the firm sells an asset that it owns and then leases to same asset back from the buyer.

» What is reinvestment plan (DRIP)?
Answer: An operational plan allowing to automatically reinvest dividend payments in additional shares of the company’s stock.

» You can also read: Financial Management : Part-3