how corporations issue securities

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1、confirmingpagesPART4CHAPTER"""""15FINANCINGDECISIONSANDMARKETEFFICIENCYHowCorporationsIssueSecurities!InChapter11weencounteredMarvinEnterprises,explaintheprocessforregisteringtheofferingwiththeoneofthemostremarkablegrowthcompaniesoftheSecuritiesandExchangeCommissionandweintroducetwenty-firstcentury

2、.ItwasfoundedbyGeorgeandyoutotheunderwriterswhobuytheissueandresellitMildredMarvin,twohigh-schooldropouts,togetherwithtothepublic.WealsoseethatnewissuesaregenerallytheirchumCharlesP.(Chip)Norton.Togetthecompanysoldbelowthepriceatwhichtheysubsequentlytrade.offthegroundthethreeentrepreneursreliedonth

3、eirTounderstandwhythatisso,weneedtomakeabriefownsavingstogetherwithpersonalloansfromabank.sortieintothefieldofauctionprocedures.However,thecompany’srapidgrowthmeantthattheyAcompany’sfirstissueofstockisseldomitslast.InhadsoonborrowedtothehiltandneededmoreequityChapter14wesawthatcorporationsfaceapers

4、istentcapital.Equityinvestmentinyoungprivatecompaniesfinancialdeficitthattheymeetbysellingsecurities.isgenerallyknownasventurecapital.SuchventureWethereforelookathowestablishedcorporationsgocapitalmaybeprovidedbyinvestmentinstitutionsorbyaboutraisingmorecapital.Intheprocessweencounterwealthyindivid

5、ualswhoarepreparedtobackanuntriedanotherpuzzle:Whencompaniesannounceanewissuecompanyinreturnforapieceoftheaction.Inthefirstofstock,thestockpricegenerallyfalls.WesuggestthatpartofthischapterwewillexplainhowcompaniesliketheexplanationliesintheinformationthatinvestorsreadMarvingoaboutraisingventurecap

6、ital.intotheannouncement.VenturecapitalorganizationsaimtohelpgrowingIfastockorbondissoldpublicly,itcanthenbefirmsoverthatawkwardadolescentperiodbeforetheytradedonthesecuritiesmarkets.Butsometimesarelargeenoughtogopublic.ForasuccessfulfirminvestorsintendtoholdontotheirsecuritiesandarenotsuchasMarvin

7、,thereislikelytocomeatimewhenitconcernedaboutwhethertheycansellthem.Intheseneedstotapawidersourceofcapitalandthereforecasesthereislittleadvantagetoapublicissue,andthedecidestomakeitsfirstpublicissueofcommon