25556 Chapter Notes - Chapter 9 & 10: Common Stock, Byrsonima Crassifolia, Investment Banking
Document Summary
The nancing decision refers to a rm"s relative use of debt and equity in fencing its operations. Equity is the funds supplied to the business by its owners: Payments to the equity suppliers are not a binding commitment from the rm and they have the lowest payment priority, they are residual. As the returns to equity suppliers are more risky, its expected return or cost will exceed that of debt. Emerging rm - business that aspires to grow into a large company, seeking equity from the venture capital market to nance its development. Venture capital - equity invested by patient, risk-taking investors in aspiring growth businesses. Business angels - risk-taking, wealthy, patient investors who participate in the running of the rm during its development stage. Raise funds from super funds, insurance companies, banks and wealthy individuals. Invest in a number of new businesses to spread the risk of loss. May specialise in certain industries or stages of development.
