A listed company faces regulatory and market constraints on how much new equity it can raise and the methods it can use. Private placements, rights issues, and dividend reinvestment schemes are all subject to investor demand, market conditions, and regulatory approval, making none of the statements A, B, C, or D universally correct.

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A Listed Company

Question 76

Multiple Choice

A listed company:

A) can generally raise as much new equity as it wishes through a private placement
B) can expect its share price to rise if it conducts a rights issue
C) will successfully conduct a rights issue if the subscription price is set above the current share price
D) can rapidly increase its equity capital through dividend reinvestment schemes.
E) None of these are correct.

Correct Answer: