Question : Case Study 71
LMN Enterprises is a startup aiming to raise funds for its expansion into international markets. The company's management is considering different methods of raising funds from the capital market.
Question :
LMN Enterprises is exploring methods to raise funds from the capital market. Which method involves issuing securities to the public?
Option 1: Private Placement
Option 2: IPO (Initial Public Offering)
Option 3: Rights Issue
Option 4: Follow-on Public Offering (FPO)
Correct Answer: IPO (Initial Public Offering)
Solution : The correct answer is (b) IPO (Initial Public Offering)
An IPO is the process by which a company offers its shares to the public for the first time. LMN Enterprises, as a startup, would go through an IPO to raise capital by selling ownership stakes (shares) to a wide range of investors, including individual and institutional investors. The company becomes publicly traded, and its shares are then traded on a stock exchange.
If LMN Enterprises chooses to issue new shares to its existing shareholders, what is this method called?
Option 1: IPO (Initial Public Offering)
Option 2: Private Placement
Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile