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Finance & Accounting
Pages 9 (2259 words)
Report Table of Content Answer a) 3 Answer b) 5 Answer c) 10 References 11 Answer a) XX chemical is medium sized organization. Currently, the company needs raising additional finance as the director has been considering possibility of running projects in abroad.
Medium sized businesses like XX chemical that wants to diversify into foreign markets and start their business activity there, need to invest huge amount of capital in foreign markets. These types of businesses are the main target customers of leading investment banks across the world (Ritter, 2003, p.278). Medium sized companies generally target the emerging markets for foreign direct investment. They prefer issuing rights for raising fund as rights issue is one of the most efficient to raise fund. Investment banks are recognized for expertise in this service. Rights issue refers to corporate invitation by the companies to the existing shareholders of the companies to buy more shares of the companies. The companies offer shareholders to purchase the new shares at a discounted market price than the current market price of the share of the company. Investment banks provide this service to the businesses like XX chemical and it is called underwriting service of investment banks (Chemmanur & Fulghieri, 1994, p.57). Underwriters are those who issue new share as initial public offering or secondary public offering of companies that need additional fund for strategic business activity. ...
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