7. Other direct investments Flashcards
Equities
Ordinary shares, Owners of the company
- receive shares of profits
- Participate in decisions
Securities
Financial assets which can be traded
Dividend
A portion of the companies profits
4x Share price factors
- Profitability
- Strength of the market sector
- strength of UK+Global economy
- Supply and demand
Main market criteria
Main Market
applicants have to been trading for 3+ years
25% of capital has to be public
Outline the primary and secondary stock market.
Primary Market- raising finance
Secondary Market - Buying and selling securities
Alternative Investment Market
Enable smaller companies to raise capital Ftse 100 Ftse 250 Ftse 350 Ftse All shares
Market Capitalisation
The market value of a company, calculated by multiplying the number of shares in issue by the share price
dividend cover
profits paid out as dividends in a particular distribution
50% of profits paid = cover of 2
rights issues
Existing shareholders have to be offered shares first
This is to raise capital
Scrip issues
Free shares to additional shareholders
reduces share price
No capital gained
Preference shares
paid before ordinary shares
fixed rate
No voting rights
Convertible shares
Securities which can later be converted to shares
Once corporate bonds
Warrants
Give the holder the right to buy shares at a fixed price at an agreed future date
Money. market instruments
short term debt
