Question
Identify the correct key terms that match to the following scenarios: a) Harta Mega Bhd, a property developer, recently announced that they were exploring the
Identify the correct key terms that match to the following scenarios:
a) Harta Mega Bhd, a property developer, recently announced that they were exploring the possibility of splitting its manufacturing division from the group into a separate public listed company to further unlock greater value for the respective business units. (2 marks) b) A brokerage firm lends money to one of its clients that intended to buy more stocks than his cash alone would allow. While it increases the buying power of the client, the stocks also then serves as the collateral for that borrowing. (2 marks)
c) Otago Marine, a young private company, decided to issue new shares to be sold to the general public in the primary market to gain more access to market capital. The capital gains from the sale of the shares will be used to buy machineries, add more vessels, and repay for the debts of a company. (2 marks)
d) Robinhood Inc. decided to issue more shares of stock by exchanging a specified number of new shares to its current shareholders without diluting the value of their stakes. This strategy also helps the company to lower its share price while increase the number of shares outstanding, which could be appealing to the new investors. (2 marks)
e) Aflac Holdings re-acquire its own shares from the open market following its corporate strategy early this year to reallocate their equity capital and to reduce the overall cost of capital of the firm. (2 marks) f) Syakir open his trading position by borrowing shares that he does not own from his broker. He plans to sell the borrowed shares because he believes a decline in the shares value very soon, in which he could buys the shares back from the market at lower price and to return them to his broker while securing his profit from the strategy. (2 marks) g) Purchasing shares of stock(s) in anticipating the stocks value will rise over time. (2 marks)
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