Buy Capital structure and capital budgeting

Buy Capital structure and capital budgeting
Agency problems Publicly traded companies are likely to have many different
owners. Private companies, however, have relatively few owners. Does this
mean that agency problems do not exist for privately held corporations? If so,
why? If not, give specific examples of how agency problems could occur in this
setting.
5. Sarbanes-Oxley What is the motivation behind the legislation? What does its
implementation mean to publicly held corporations?
6. Primary markets What is the difference between primary and secondary
markets? Give an example of each.
7. Initial public offerings What are the primary “ingredients” in the IPO process?
Describe each in detail.
8. Venture capital and underwriters Describe two financial intermediaries that
often help the issuing firms in the going-public process. What roles do each
play?
9. Initial public offerings Discuss the paperwork that is involved in an IPO. What
is included in each and what purpose does it serve?
10. Initial public offerings Johnny Quickset sits three seats across from you in
finance class. After class he approached you and asked the following question:
“How do underwriters make money?” How do you answer that question?
11. Lockup agreement Scotty Blow’s lamp store went public on July 14, 2010.
Three weeks later, Scotty sold 47 % of his shares for a profit of $2 million. Why
is this a bad thing? Discuss the mechanism designed to eliminate this type of
activity.
12. Goal of the firm What is the only appropriate goal of the firm? Why?
13. Goal of the firm Name at least four other potential goals of the firm and discuss
what those goals lack in relation to the true goal.
14. Goal of the firm and agency problems Suppose the CEO of a Fortune
500 firm superficially inflates year-end earnings reports to increase his bonus.
What is this an example of? How does this influence the goal of the firm?
15. Director voting What is the primary difference between cumulative and
straight voting? How does this affect minority shareholder participation?
16. Proxy voting Discuss how proxy voting affects shareholder influence over the
ownership structure. What potential benefits of proxy voting come to mind?
Can you think of any potential disadvantages?
17. Capital budgeting How important is capital budgeting in corporate finance?
What types of issues have to be addressed in capital budgeting?
18. Capital structure How important is capital structure in corporate finance?
What types of issues have to be addressed in capital structure?
19. Capital structure Suppose you are the CFO of a company that just built a $40
million dollar plant. What are your options for paying for this plant?
20. Capital structure and capital budgeting Your friend is having trouble grasping the concepts of capital structure and capital budgeting, so you decide to
explain it to her in terms of her personal financial situation. How can you do