Define each of the following terms: a. Going Public; new issue market; initial p

Question

Define each of the following terms: a. Going Public; new issue market; initial public offering (IPO) b. Public Offering; Private Placement. c. Venture Capitalist; Roadshow; Spread d. Securities and Exchange Commission(SEC); registration statement; self registration; margin requirement ; insiders e. Prospectus; " red herring" Prospectus . f. National Association of Securities (NASD) g. Best efforts arrangement; underwritten arrangement h. Refinancing; Project Financing; Securitization ; maturity matching

Explanation / Answer

a. Going Public; new issue market; initial public offering (IPO) = An public offering is first sale of stock in which shares of a company sold to institutional investors that in turn sells to the general public on a securities exchange, for the first time. IPOs are often issued by smaller, younger companis seeking the capital to expand. the IPO process is colloquially known as going public

b. Public Offering; Private Placement.= private placement is the sale of securities to a relatively small number of selected investors for raising capitl. private placement is the opposite of public issue, in which securities are available for sale on the open market.

c. Venture Capitalist; Roadshow; Spread = it is an investor who either provies capital to startup ventures or suppports small companies that wish to expand but not have access to equities markets.

d. Securities and Exchange Commission(SEC); registration statement; self registration; margin requirement ; insiders = SEC ia an government commmission formed to regulate the security market and protect the interest of investors. in addition to regulation and protection, it also monitors the corporate takeovers in the US.

e. Prospectus; " red herring" Prospectus = a legal formal document which is required to be filed with securities exchange that contains details about investment offering for the sale to public.

f. National Association of Securities (NASD) = The NASD was a self-regulatory organization of the securities industry responsible for the operation and regulation of the Nasdaq stock market and over-the-counter markets. It also administrated exams for investment professionals, such as the Series 7 exam. The NASD watches over the Nasdaq to make sure the market operates correctly. The NASD merged with the New York Stock Exchange's regulation committee to form the Financial Industry Regulatory Authority, or FINRA

g. Best efforts arrangement; underwritten arrangement is an agreement in which an underwriter promises to make a full fledged atempt to sell as much of an initial publice offering as possible to the public.

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