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Anjali who is doing graduation from Delhi University has got an idea to make a safety gadget for college going girls which will give alert message to the registered numbers as well as nearest police stations, if the wearer is in any kind of danger. To execute her idea she requires finance. She convinced one of her teachers who have the knowledge of making such gadget to provide her finance for feasibility study. Identify the source of funding used by Anjali:
Xma Ltd. raised additional finance from existing shareholders by offering securities to them in proportion to the shares they are holding. Prabhat Luminous Ltd. raised funds by selling its shares mainly to the General Insurance Corporation of India and Army Group Insurance. To increase the efficiency of the employees and reduce the labour turnover, the management of CVK Ltd. made employees the shareholders and enabled them to share the profits of the company. Sujata Al Ltd. raised funds from Mr. Bansal, an affluent individual in exchange for ownership equity. Which among the following is a method of raising the required capital in the primary market? Identify from the given options.
_____ is a type of private equity capital provided as seed funding to early-stage, high potential, high risk, growth up companies and entrepreneurs who lack the necessary experience and funds to give shape to their ideas.
A capital market is a mechanism meant for transfer of money capital from which of the following?
Assertion (A): Venture capital is subset of Public equity. Reason (R): Venture Capital funds take stakes in fast-growing startup businesses, planning to exit the investment in either an initial public offering (IPO) or merger at a price many multiples of their investment.
The entrepreneur at this stage needs assistance from the venture capitalists for expansion, modernization, diversification so that economies of scale and stability could be attained:
Assertion (A): The Angel Investors were given the acronym FFF i.e. FRIENDS, FAMILY, AND FOOLS. Reason (R): Angel investors are high net-worth individuals who have the knowledge, expertise, and funds that help start-ups without due diligence.
XYZ Ltd. is a manufacturer of coffee. The company planned to expand and was planning to buy a land in Karnataka. The chief financial officer suggested to offer the shares to a limited number of sophisticated investors. Out of the following, identify the method of raising the funds being suggested by the CFO.
______ is an affluent individual who provides capital for a business start-up and early stage companies having a high-risk, high-return matrix usually in exchange for convertible debt or ownership equity.
Identify the place where transaction happens in shares or debentures subsequent to its primary offering:
ABC Ltd. decided to raise funds by issuing shares. The finance department felt that the company should offer the shares to existing shareholders on a pro-rata basis. Out of the following, identify the method of raising the funds being suggested by the finance department.
Name the specialized financial institution that was incorporated by a special Act of Parliament to provide medium and long term credit to eligible industrial enterprises in the corporate sector, particularly to those industries to which banking facilities are not available. Also state any one of its objectives.
______ is an affluent individual, who provides capital for a business start-up having a high-risk, high-return matrix usually in exchange for convertible debt or ownership equity.
Primary Market facilitates transfer of resources from the savers to the entrepreneurs seeking funds for setting new enterprises.
The secondary market enhances the marketability of securities and provides liquidity to investments.
How many whole time members are nominated by the Union Government of India to Securities and Exchange Board of India?
Assertion (A): Offer to employees means sale of its securities by a company to a limited number of sophisticated investors. Reason (R): Offer to employees enables employees to become shareholders and share the profits of the company.
Anarya Ltd., a company manufacturing cars wants to enter into e-car business. For this it needs additional funds. To speed up financing it decides to sell some of its shares to institutional investors. The company also does not wish to disclose this information in the open market. Identify the method of floatation of new issues used by the company:
Assertion (A): Public issue is the most popular method of raising capital these days by the entrepreneurs. Reason (R): The capital does not have to be repaid and does not involve an interest charge.
Vision Ltd. offers stock options to its employees. This enables employees to become shareholders of the company leading to higher efficiency and lower labour turnover. The method of floatation of new issues being used by Vision Ltd. is:
Abhiraj Ltd., an Indian company, started functioning in 1999 and was registered under the Companies Act, 1956. The Securities and Exchange Board of India performed one of its functions and conducted investigations against Abhiraj Ltd. The investigations resulted into the fact that the company did not follow the proper procedure. Therefore SEBI imposed penalty upon the company. (a) Identify the function being performed by SEBI. (b) Can Abhiraj Ltd. appeal against SEBI decision? If yes, where?
Pipro Ltd. is a software company based in Bengaluru, India. It is already listed at National Stock Exchange. In order to expand its business in north-east under the Look East Policy of the government, it needs financial resources. State any two methods through which she can fulfill her financial requirements through Primary Market other than Public issue.
What is the job of Angel investors? State any one feature of Angel investors.
(a) The decision of going public by a company is considered to be a complex decision that requires careful consideration and planning as it requires additional obligations and reporting requirements. State any two such obligations and reporting requirements.
(b) Why are capital markets regarded as financial intermediaries? State.
State any three functions of a stock exchange.
State any three points of importance of stock exchange from the viewpoint of investors.
Explain the following as methods of new issues: (a) Public issue; and (b) Rights issue
What is meant by Capital Market? Why is it considered as the most important source of raising finance?
State any six features of Venture Capital Finance.
From the given situations, identify and explain the method of floatation of new issues: (i) ICICI raises funds by selling issues mainly to GIC and LIC. (ii) Jay holding 100 shares given privilege to subscribe to new issue on pro-rata basis. (iii) Gopal given 25 equity shares as performance bonus.
Angel Investment not only brings in funds but also an invaluable mentor to the business. In the light of this statement state any three features of angel investors.
(a) Explain the following three stages in a company development when an entrepreneur can seek venture capital: (i) Seed capital finance (ii) Start-up finance (iii) Second round-financing
(b) Who are called Angel Investors? Explain any five features of Angel Investors.
What is meant by Capital Market? Why is it considered as the most important source of raising finance?
Pratap Furnitures Ltd. is the market leader in moulded furniture. Now it is planning to enter into a new product line, furniture made of wood and bamboo. To start production it needs Rs.2 crore. Pratap Furniture Ltd. is planning to raise funds by issue of prospectus. But its Board of Directors decided to honour the existing shareholders by offering them the shares on pro-rata basis, before going for issue through prospectus. (i) Identify and explain the type of capital market from which Pratap Furnitures Ltd. is going to raise funds. (ii) Explain the two methods of raising funds discussed in the above case. (iii) What reward do the investors get when shares are issued through prospectus?
While there are benefits of going public as a source of finance for a company, it also means additional obligations. Analyse and justify the statement.
Geetha has completed her B.Tech in chemical engineering from a famous IIT. She wants to start a chemical production unit using new and untried technology involving high risk factors along with high growth potential. She wants to raise funds from a source that provides private equity capital as seed funding. Suggest Geeta the source of finance. Give the meaning of the source suggested and state any four features of this source.
Source: Venture Capital - Fuelling Innovative Start-ups. Aarav Mehta developed a smart wearable patch. He approached a venture capital firm which provided initial funding to test the concept. After prototype was developed, the firm invested further. Identify and explain the stage of venture capital financing when Innova Ventures provided Aarav funds for developing and testing his idea. At which stage did the venture capitalist invest again? Explain. Why do you think venture capital is important for startups like HydroTrack?
Explain the characteristics of Angel investors.
(a) The highly anticipated Initial Public Offer (IPO) of Life Insurance Corporation of India (LIC), emerged as the largest turnout in terms of public participation. Identify the type of capital market LIC of India has approached. (b) Distinguish between the two types of capital markets. (c) Capital markets are an important source of raising finance for entrepreneurs. Justify the statement.
Distinguish between angel investors and venture capitalists. Describe the role of an angel investor in an entrepreneurial venture.
What is meant by Venture Capital? State any four features of venture capital finance.
Give the meaning of Venture Capital. Entrepreneurs can seek venture capital to assist various stages in the company development. Explain Seed Capital stage and Pre-start-up and Start-up stage of financing by venture capitalists.
What is meant by Primary Market? Explain the four methods used by an entrepreneur to raise the required capital in the Primary Market.
'Pratap Furnitures Ltd.' is the market leader in moulded furniture. Now, it is planning to enter into a new product line, that is, furniture made of wood and bamboo. To start production it needs new machines and skilled labour along with good quality wood. For all this it needs ₹ 2 crore. 'Pratap Furnitures Ltd.' is planning to raise funds by issue of prospectus. But its Board of Directors decided to honour the existing shareholders by offering them the shares on pro-rata basis, before going for issue through prospectus. (a) Identify and explain the type of capital market from which 'Pratap Furnitures Ltd.' is going to raise funds. (b) Explain the two methods of raising funds discussed in the above case. (c) What reward do the investors get when shares are issued through prospectus ?
The decision of 'going public' by a company is considered to be a complex decision that requires careful consideration and planning as it requires additional obligations and reporting requirements. State any two such obligations and reporting requirements. Why are capital markets regarded as 'financial intermediaries' ? State.
Give the meaning of 'Venture Capital'. Entrepreneurs can seek venture capital to assist various stages in the company's development. Explain 'Seed Capital stage' and 'Pre-start-up and Start-up stage' of financing by venture capitalists.
'Anarya Ltd.', a company manufacturing cars wants to enter into e-car business in the next few months. For this it needs additional funds. To speed up financing it decides to sell some of its shares to institutional investors. The company also does not wish to disclose this information in the open market. From the following, identify the method of floatation of new issues used by the company :
Assertion (A) : Public issue is the most popular method of raising capital these days by the entrepreneurs. Reason (R) : The capital does not have to be repaid and does not involve an interest charge. Choose the correct option from the following :
Explain the following three stages in a company's development when an entrepreneur can seek venture capital : (i) Seed capital finance (ii) Start-up finance (iii) Second round-financing Who are called 'Angel Investors' ? Explain any five features of Angel Investors.
Which of the following methods of floatation of new issues is used by the company, when the company directly sells its securities to a limited number of sophisticated investors and at times does not want to disclose information to the open market ?
'It is an equity-based investment in a growth-oriented small to medium business to enable the investor to accomplish objectives in return for minority shareholding in the business.' This investment has to be carefully evaluated and analysed by an entrepreneur to find out the stage at which he/she requires this investment to assist in. (i) Identify the type of capital discussed in the above lines. (ii) Explain the three stages included in 'Early Stage Financing' if the capital identified in (i) above is required at this stage. 'An affluent individual who provides capital for a business start-up and early stage companies having a high-risk, high-return matrix usually in exchange for convertible debt or ownership equity.' (i) Identify the source to raise finance available to an entrepreneur discussed in the above lines. (ii) State any four features of the source of raising finance discussed in (i) above.
Aditya Verma, the founder of a 'Fintech' startup, wanted to raise funds for expanding his digital lending platform. Instead of approaching the general public, he decided to directly sell securities of his company to a limited number of sophisticated investors including Life Insurance Corporation of India, General Insurance Corporation of India, and Army Group Insurance. The method of raising capital used by Aditya Verma was :
Public issue is the most popular method of raising capital these days by entrepreneurs, which involves raising of funds directly from the public through the issue of prospectus. Which of the following is an advantage of raising funds through public issue ?
Define 'Capital Market'. Explain, by giving any three points, why capital markets are the most important source of raising finance for entrepreneurs. Also give the meaning of 'Financial Intermediation'. Give the meaning of 'Venture Capital'. Explain how entrepreneurs can seek venture capital at 'Early-stage financing' and 'Last-stage financing'.