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Dear tutor,
Can u explain the meaning of this paragraph
It’s about “offer for sale of shares ar fixed price”It said ” … this method is used by most large issues. IT TENDS TO PRODUCE A MORE ACTIVE AFTER-MARKET THAN A PLACING. IF DEMAND FOR THE SHARES EXCEEDS THE NUMBER AVAILABLE FOR SALE, THE ISSUING HOUSE WILL DECIDE WHICH APPLICANTS ARE SCALED DOWN TO THE NUMBER OD SHARES THEY ARE ALLOTTED WITH”
Thank u in advance
Please do not push for an answer – it won’t make it come any faster (we do not sit at the computer all day!).
Suppose 10,000 shares are offered for sale, and people apply for 100,000 shares.
What the might decide to do is then issue everyone with 10% of the number of shares they applied for.
However they can do it anyway they want. For example, they might decide that people who applied for up to 500 shares will get given them in full, and people applying for more than 500 get just a % of what they applied for.
sorry about that. Im afraid that u forgot to answer my ques so its just a remind
Thank you for ur answer. Im very clear how flotation worksAnother question that i still need ur help
can u explain for me this sentence, i came across several times but not quite understand in deep about this“. .. from this perspective, a dividend increase should arise from increases maintainable profitability, not from a desire to ” make the company more attractive”. Increasing the dividend will not generate any additional capital for company, SINCE EXISTING SHARES ARE TRADED ON THE SECONDARY MARKET”
What is the secondary market and what is the meaning of this sentence
Thank u very much
Once a company has issued shares, shareholders then buy and sell them from/to each other on the stock exchange. This is the secondary market.
The bit you have quoted is not true as it stands (but it might be in the context of the rest of the paragraph).
Are you watching my free lectures? They (when used with our free lecture notes) are a complete course for Paper F9 and cover everything needed to be able to pass the exam well.
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