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Which of the following is least likely to be a reason for seeking a stock market listing?
A Access to a wider pool of finance
B Improving existing owners’ control over the business
C Transfer of capital to other users
D Enhancement of company’s imageThe correct answer is B
Sir can you pls tell the reasons why A and C are reasons for seeking a stock market listing?
Thank youA is the most important reason. If the shares are listed on the stock exchange then it is easier to raise more finance by issuing more shares. People are more likely to buy new shares because they know that they will easily be able to sell them on the stock exchange in the future. (It is much harder to sell shares in an unlisted company because it means finding someone who is prepared to buy them.)
C is much less obvious, but if the shares are listed then new shares can be issued to others and then they will have a share of the capital.
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