Question

In: Finance

1- Suppose you hit it big with the app and it makes a lot of money....

1- Suppose you hit it big with the app and it makes a lot of money. The company is worth a lot. You want to sell half of the company to investors and keep the other half. What is the process that allows you to sell stock to investors via the stock exchanges?

2-If you are already a publicly traded company, can you issue more stock? What is that called?

3. The NYSE primarily has brokers and NASDQ dealers. How are they different?

Solutions

Expert Solution

1- Suppose you hit it big with the app and it makes a lot of money. The company is worth a lot. You want to sell half of the company to investors and keep the other half. What is the process that allows you to sell stock to investors via the stock exchanges?

The process to sell half of the business to the public via stock exchange is called the Initial Public Offering (IPO). The company issues shares in exchange for money in the primary market. The shares are then traded on the exchange. The stock exchange is also called the secondary market.

2-If you are already a publicly traded company, can you issue more stock? What is that called?

Yes, a publicly traded company can issue more stock to raise equity capital. It is called rights issue. Usually, the company issues new shares at a discount to the current market price.

3. The NYSE primarily has brokers and NASDAQ dealers. How are they different?

NYSE allows traders to trade among themselves through brokers. When we buy or sell shares of the company we do so with other traders.

NASDAQ is a dealers market meaning we buy or sell shares to the dealers. The dealer is said to make a market. We do not transact directly with other traders.


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