Chapter 4 - Equities, Part 2 Flashcards
What are the disadvantages of going public?
1) regulation - public must govern themselves more openly than private ones2) takeovers - you can become a target3) short-termism- shareholders put pressure for short term goals
Who is responsible for allowing a company to be listed on the LSE?
A division within the FCA called the United Kingdom Listing Authority (UKLA)
What are the requirements to be listed on the LSE?
1) company is a Plc 2) market capital is at least £700k3) company should have been trading for at least 3 years and be supported by historic revenue4) at least 25% of the company’s shares should be in public hands5) the company must have sufficient working capital for the next 12 months
How are the requirements different to be listed on the AIM market?
1) no trading history required2) no minimum market cap3) no minimum proportion of shares held by the publicEach company must have a nominated advisor - NOMAD - (to guide you through the process), and a nominated broker - NOBO - a market maker.AIM isn’t regulated by regulators only regulated by LSE
What are the continuing obligations that both the LSE and AIM market must follow?
Obliged to issue half yearly reports and notify the market of any new, price-sensitive informationAIM isn’t regulated by regulators, it’s only regulated by LSE
What are the advantages of going public?
1) capital - raise money and founders can sell their shares if they want to leave2) takeovers - use shares as payment3) status - market itself to customers etc4) employees - stock options to key staff as incentives.
How many companies are in the FTSE all share?
800 companies including those in the FTSE 350; 98% of the UK market value
How many companies make up the following index and what country is it for?DJIA
Dow Jones industrial average30U.S.Narrow view of market
How many companies make up the following index and what country is it for?S&P 500
Standard and poors500Wider viewU.S.
How many companies make up the following index and what country is it for?NASDAQ Composite
Focus on NasdaqU.S.3000+
How many companies make up the following index and what country is it for?NIKKEI 225
225JapanThis is price weighted (not value weighted)
How many companies make up the following index and what country is it for?CAC 40
France40
How many companies make up the following index and what country is it for?Xetra DAX
Germany30
How many companies make up the following index and what country is it for?Hang seng
Hong Kong/ China58
What are the periods before and after the ‘T’ period called in relation to purchasing shares?
Before is the ‘cum-dividend’ period when the buyer is entitled to the dividend (Wednesday and before)After is the ‘ex-dividend’ period when the buyer doesn’t get the dividend.End of T+2 is called record date or books closed (isn’t when the dividends are paid.
