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Funds are raised from international financial market through sale of securities such as long term, medium term and short term funds.
LONG TERM INSTRUMENTS
1.INTERNATIONAL EQUITIES
International equities are a new instrument representing foreign portfolio equity investment. They are ordinary shares sold to international investors in the form of American or Global depository receipts. The investor gets dividend and not interest . They do not have the same voting rights as in the case of foreign direct investment.
The benefit are:
a) The company issues international equities when the domestic capital market s already flooded with its shares.
b) The presence of restrictions on issue of shares in the domestic market facilitates issue of international equities.
c) Company issues international equity for gaining international recognition among the public.
d) International equity bring in foreign exchange which is vital for a firm in a developing country.
e) International capital is available at lower cost through international equities.
f) Funds raised through such an instrument do not add to the foreign exchange exposure.
g) It brings in diversification benefits and raise return with a given risk or lower risk with a given return.
2. INTERNATIONAL BONDS
They are debt instruments that are issued by international agencies, government and companies for borrowing foreign currency for a specified period of time. The issuer pays interest to the creditor and makes repayment of capital. The different types of bonds are:
-Foreign bond
-Euro bond
-Global bond
-Straight bonds
-Floating rate notes
-Convertible bonds
-Cocktail bonds
MEDIUM TERM INSTRUMENTS
MEDIUM TERM EURO NOTES
It is an extension of short term euro notes, which is issued to get medium term funds in foreign currency. They are not underwritten, but there is a provision for underwriting. They carry fixed rate of interest.
SHORT TERM INSTRUMENTS
1. EURO NOTES
Euro notes are like promissory notes issued by companies for obtaining short term funds. They are denominated in any currency other than the currency of the country where they are issued. It is a low cost funding route. The documentation facilities are minimum. Investors prefer them due to short maturity. When issuer issues euro notes, it hires the service o agent who issues the notes, gets them underwritten and sells them through placement agents. After selling period is over, the underwriter buys the unsold issues.
2. EURO COMMERCIAL PAPERS
They are short term fund instruments issued only by highly rated companies. They are not underwritten. It faces minimal documentation. ECPs have longer maturity going u to one year. The ECP route for raising funds is investor driven.
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What are the advantages and disadvantage of raising capital of a compny?
Perhaps the most significant advantage of raising capital in a company is to fuel the company's growth. Perhaps the most significant disadvantage of raising outside capital is dilution of ownership.
What are the advantages of raising extra capital from shareholders?
The extra capital does not have interest charges and it doesn't to be repaid to the shareholders because it is a permanent source of finance to the business. Raising capital is a low financial risk to the business therefore the business assets are not used as security for payment. Raising extra capital is also cheaper than taking a financial loan. Shey
What are the advantages of issuing of share?
Raising of capital. Reasons for wanting to raise capital is another topic, though.
What are the sources of capital a sole proprietorship?
owners contribution
What is the difference between source of funds and sources of funds?
sources of fund means from where the capital we are getting & source of fund means how we can get the capital.
Various sources of raising working capital?
private investers are an excellent way to raise the capital.
What is capital raising?
Capital raising is the act of obtaining any form of capital in the capital structure, whether debt or equity. References: <a href="http://www.pegasusics.com/capital-raising.php">Capital Raising</a>
Equity sources of corporate fund raising?
equity sources of corporate fund raising
What are the advantages and disadvantage of raising capital of a compny?
Perhaps the most significant advantage of raising capital in a company is to fuel the company's growth. Perhaps the most significant disadvantage of raising outside capital is dilution of ownership.
What are the rules for the SEC to encourage internet technique for small companies raising capital?
The Securities Act of 1933, as amended, contains the regulations and rules governing capital raising. You should become familiar with these regulations/rules before venturing into the capital raising world. If you're interested in raising capital, we can help: drop me a note at bill@enterprise-creations.com.
What are primary sources of capital to a firm?
The primary sources of capital to a firm includes owners equity and sales revenue or however you bring in money which is called equity capital. Debt capital and specialty capital are also sources of capital.
Raising capital for a Public limited company?
a limited can raise capital by launching shares to the market
What are the advantages of raising extra capital from shareholders?
The extra capital does not have interest charges and it doesn't to be repaid to the shareholders because it is a permanent source of finance to the business. Raising capital is a low financial risk to the business therefore the business assets are not used as security for payment. Raising extra capital is also cheaper than taking a financial loan. Shey
What are some ideas to raise capital for a business?
Some ideas for raising capital to start a business include: One can get a loan from the bank, through venture capitalists, and angel investors. One must have a well thought out business plan, or else it will be difficult to get funding from those sources.
What are the advantages of issuing of share?
Raising of capital. Reasons for wanting to raise capital is another topic, though.
What are the sources of capital a sole proprietorship?
owners contribution
What is the difference between source of funds and sources of funds?
sources of fund means from where the capital we are getting & source of fund means how we can get the capital.
