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A private company wants to expand its operations - HSC - SSCE Business Studies - Question 19 - 2024 - Paper 1
Question 19
A private company wants to expand its operations. To raise funds, it intends to become a public listed company. What name is given to this form of equity finance? ... show full transcript
Worked Solution & Example Answer:A private company wants to expand its operations - HSC - SSCE Business Studies - Question 19 - 2024 - Paper 1
Step 1
What name is given to this form of equity finance?
Answer
The correct answer to this question is C. New issue of shares.
When a private company decides to raise funds by becoming a public listed company, it typically goes through the process of issuing new shares to the public. This process allows the company to access capital from a wider range of investors, thus supporting its operational expansion.
To clarify:
- A. Private equity refers to investments made into private companies (not through public share issuance).
- B. Commercial bill refers to a short-term debt instrument used in financing.
- D. Share purchase plan generally refers to a program that allows employees to buy shares at a discounted rate, not the process of issuing new shares in the public market.