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Financial Management. Evaluation of a company
Finance & Accounting
Pages 10 (2510 words)
Financial Management Table of Contents Answer a) 3 Answer b) 5 Answer c) 9 References 12 Answer a) As a medium size company, XX Chemical needs finance for its foreign investment in projects. Capital investment is one of the most critical strategic business activities of multinational businesses.
Rights issue by the companies refers to a corporate invitation to the existing shareholders of the company to buy additional new shares of the company. Cash-strapped companies generally turn to rights issue for raising finance from market for investments in business activates. The companies grant shareholders chance to buy new shares at a discount rate than current market of share on a pre mentioned future date. Investment banks do this activity for business for some percentage of banking percentage on total amount of issued fund. By issuing share, the companies give opportunity to the shareholders to increase their financial exposure by purchasing companies’ stocks at a discounted price. Investment banks conduct the necessary legal activities to issue new shares on behalf of the companies by taking banking fees. The can trade the issued rights on market in similar way they trade ordinary shares through stock exchange until the new shares are bought back by the companies. Theoretically, some traditional and efficient methods are used to evaluate capital investment in domestic as well as emerging foreign markets by businesses. ...
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