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Commercial Law - Financing a Deal > Financing A Deal > Flashcards

Flashcards in Financing A Deal Deck (11)
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1
Q

Cash reserves

A

financing operations using existing cash resources ( for instance retained profit)

2
Q

Advantages of Cash Reserves

A

Control
Cost Savings
Arranging Finances

3
Q

Disadvantages of Cash reserves

A

Effectiveness

4
Q

Bank Loan / Overdraft

A

Firms can borrow from banks and then pay back the loans in instalments, plus interest.

5
Q

Syndicated Loan

A

where multiple banks work together to contribute funds in order to provide the required capital

6
Q

Advantage of Bank Loan/Overdraft / Syndicated Loan

A

control
cost savings
effectiveness
arranging finance

7
Q

Disadvantages of Bank Loan/Overdraft/ Syndicated Loan

A

Security
Costs
Repayable On Demand

8
Q

Capital Markets

A

these are financial markets that link organisations seeking capital and investors looking to supply capital. Securities including shares and bonds are traded in the capital markets between governments and companies seeking capital, banks private investors and other investors such as hedge funds and pension funds.

9
Q

Bond Issue

A

this is where a company ( issuer) sells bonds (similar to IOUs) through the debt capital markets. Bonds are purchased by investors and entitle them to periodic interest payment (coupon in addition to a lump sum repayment of the principal amount after a set period ( when bond matures).

10
Q

Advantages of capital markets and bond issue

A

control

effectiveness

11
Q

Disadvantage of capital markets and bond issue

A

demand

arranging finance