Past HSC Question (1 Viewer)

[Zelta-W]

I need help on this question.

Describe One advantage and One disadvantage for a business obtaining finance through the Australian Stock Exchange?

 

[Chloe238]

Well one disadvantage is it is expensive to start up and may not actually work if people aren't interested in the business

 

[jung1239]

Advantage:

Equity financing through the ASX possibly could be owners do not have to be repaid for their capital contributions - unlike debt financing.

Disadvantage:

They must become a public company which can be a hassle and time consuming as it requires specific disclosure on the business.
Dilution of control

 

[determine]

Advantage:

Equity financing through the ASX possibly could be owners do not have to be repaid for their capital contributions - unlike debt financing.

Disadvantage:

They must become a public company which can be a hassle and time consuming as it requires specific disclosure on the business.
Dilution of control

good effort!

 

[seremify007]

Keeping in mind that listing on a public exchange typically means exposure to millions more potential investors/shareholders, it enables you to raise much larger amounts of cash. Furthermore, it may even be cheaper to do this for a large amount of cash because investors are more willing to buy your securities (i.e. increased demand) because they know they can liquidate their holdings by selling their shares on the open market easily.

ps. This video is awesome. May be US-oriented (e.g. SEC) but a lot of the points are still applicable to companies around the world > http://www.youtube.com/watch?v=GnJCOof2HJk