09730-18-1Q

<SUB-PART>

a.

<SUMMARY-INTRODUCTION>

To define: The term going public, IPO and new issue market.

</SUMMARY-INTRODUCTION>

<EXPLANATION>

When the company allows the outside investors to own their shares through initial public
offering then it is known as going public. This is different from the stocks that are traded in the
public market.

Initial public offerings are the offer given by the organization to the institutional investors and
other investors to directly own company stocks. This is done through underwriting the stocks by
one or more investment banks.

The assets which are offered for the first to the investors are called new issues and the market in
which these new issues are offered is regarded as new issue market.

</EXPLANATION>

</SUB-PART>

<SUB-PART>

b.

<SUMMARY-INTRODUCTION>

To define: The term public offerings and private placements.

</SUMMARY-INTRODUCTION>

<EXPLANATION>

The term ‘public offerings’ refers to the offer that the company give to the investors by selling
company’s shares for raising capital.
The private placement is another source of raising funds in which company extend their offerings
to limited number of investors. In other words, in private placement, the company calls limited
investors to sell their company’s shares in order to raise funds.

</EXPLANATION>

</SUB-PART>

<SUB-PART>

c.

<SUMMARY-INTRODUCTION>

To define: The term venture capitalist, roadshow; spread.

</SUMMARY-INTRODUCTION>

<EXPLANATION>

The person who manages the venture capital fund is known as venture capitalist. The venture
capital is the fund that has been raised by the manager to start their set up. The venture capitalist
is considered as one of the member of the board of directors in the company.

The difference between stock price that an underwriter set for an IPO and the proceeds that is
passed to the issuing firm by an underwriter is known as spread. In simple words, it is the fee
charged by an underwriter.

</EXPLANATION>

</SUB-PART>

<SUB-PART>

d.

<SUMMARY-INTRODUCTION>

To define: The term Securities Exchange Commission (SEC), insiders, margin requirement,
registration statement, shelf registration.

</SUMMARY-INTRODUCTION>

<EXPLANATION>
The regulatory body which regulates the sale of new securities along with security exchange
operations is regarded as Securities Exchange Commission (SEC). This government agency is
helpful for ensuring market stability, sound brokerage firms and elimination of stock
manipulation. The company who desires to trade in security market is liable to get registered in
the SEC. The statement which includes financial and legal information of a company who wants
to get registered under SEC is known as registration statement.

The companies prepare a master registration statement and update the statement whenever
required. This process is regarded as shelf-registration because the company places their stock in
the shelf for selling them when the market is favorable.

Insiders are the person who is employed in the stock broking firms such as officers, directors,
major stockholders.

The percentage of stock price that has been borrowed by an investor to purchase the stock is
known as margin requirement.

</EXPLANATION>

</SUB-PART>

<SUB-PART>

e.

<SUMMARY-INTRODUCTION>

To define: The term prospectus, red herring prospectus.

</SUMMARY-INTRODUCTION>

<EXPLANATION>

The prospectus is the document which is prepared to provide information about the new security
issued along with the company details to shareholders.

The red herring is the preliminary prospectus which is issued to all the potential buyers to
provide information about the stock and company but the final price is not revealed in this
document.

</EXPLANATION>

</SUB-PART>
<SUB-PART>

f.

<SUMMARY-INTRODUCTION>

To define: The term best efforts arrangement and underwritten arrangement.

</SUMMARY-INTRODUCTION>

<EXPLANATION>

There are two methods used by the companies to sale their stocks i.e. best effort arrangement and
underwritten arrangement. When the investment banker is only liable to make all the possible
efforts to sell the stocks at offer price then it is known as best efforts arrangement. Whereas, in
the underwriting arrangement, the entire stocks are bought by the investment banker at set offer
price and resell them in the market at their own risk.

</EXPLANATION>

</SUB-PART>

<SUB-PART>

g.

<SUMMARY-INTRODUCTION>

To define: The terms project financing and securitization.

</SUMMARY-INTRODUCTION>

<EXPLANATION>

When the arrangements are made to raise funds for the large capital projects such as dam
construction, oil refineries and so on. Some of the amount is financed by one or more sponsors
and rest is financed by the lenders or lesser in these large capital projects.

The process by which conversion of financial instruments that are thinly traded into the form that
creates greater liquidity takes place is known as securitization.

</EXPLANATION>

</SUB-PART>