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This is the answer to 3b.
1.An economic recession, leading to falling share prices, may mean that the results of a share issue are uncertain. why?2. an increase in economic or business risk may mean that lenders are less likely to lend at acceptable rates ? or will impose greater restrictions ? why is that
sir i would like to know the reasons
1. If there is a recession and share prices are falling, investors are less likely to be buying shares. If they are not keen to buy shares then now is not the time to be issuing shares.
2. The more risk there is in an investment then the higher return you would expect to receive from the investment. The return you demand might not be acceptable to the company because it is too high.
sir i need further information regarding no 1 question:
. the shareholders won’t be buying shares as they now believe that the company may be performing poor is that why they r not going to invest?
but on the other hand isn’t this an opportunity to buy shares at a cheaper price?
But your question refers to a company issuing new shares. Unless they issue the shares at a low price (which they will not want to do) then they will have problems finding people prepared to buy them because there is a recession which will reduce investors expectations for the future. That is why the result of the issue will be uncertain.
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