©2012 McGraw-Hill Ryerson Limited 1 of 20 Learning Objectives 4.Analyze the dealer’s role in pricing corporate securities. Evaluate the influence of issued.

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©2012 McGraw-Hill Ryerson Limited 1 of 20 Learning Objectives 4.Analyze the dealer’s role in pricing corporate securities. Evaluate the influence of issued securities on earnings per share and market share price. (LO4) 5.Appraise the pros and cons of going public versus going private when raising funds. (LO5) 6.Describe a leverage buyout. (LO6)

©2012 McGraw-Hill Ryerson Limited 2 of 20 Public vs. Private Financing Publicly financed company: –when shares of a company are offered to the public –anyone can buy shares of the stock Privately financed company: –privately owned or held by an individual or family –securities not available to the general public –additional funds may be raised by private placement LO5

©2012 McGraw-Hill Ryerson Limited 3 of 20 Advantages and Disadvantages of Being Public Advantages: – greater availability of funds (easier to grow and raise money) – prestige Disadvantages: – company information must be made available to the public (opening the company up to public scrutiny and criticism) – high costs of going public (expensive) LO5