Welcome to Introductory Finance…
For your first assignment we plan to set a super easy, no-brainer assignment…you can expect to achieve an H1 with just a bit of effort and not too much stress at all.
For your second assignment, you will start to think you have it all figured out. But then we will take you on a path to the DARK FIERY DEPTHS OF HELL with a topic so confusing in structural nature, that you don’t really have an exact idea of what you are really meant to be talking about. We will leave the students dazed and confused, each completely lost and suffering as they attempt to find data amongst hundreds and hundreds of pages of journal articles.
At the end of the assignment, you will hand it in with the expectation of some measly barely-passing mark.
You will then ask yourself why on earth you came to Melbourne with the dream of majoring in Finance.
You will ask why the Department set an assignment worded like THIS:
“Please prepare a short report labled ‘Raising external equity capital through rights issues and private placements from 1996-2005.’ In your report you should briefly summarise the main reasons and institutional developments in raising external equity capital (rights issues and private placements) over the decade. You should then make an evaluation as to the timing, number and amount of equity capital raised through rights issues as compared to private placements. You need to justify your evaluation – explain why you have taken a particular stance.”
Back to work.
Sophie
5 thoughts on “Die Finance, Die (Sophie)”
Surely its not that hard. I did intro micro and business in the global economy (Arts student) and went pretty well.
My brother never had THAT much trouble with Finance although when I looked through his Finance books over the past few years I was like: WTF! This stuff is crazy, how are you supposed to do and remember all this crazy stuff? He was really good at maths though…
The question appears to be asking you to make a judgement, by looking at activity over the past 10 years as to which form of capital raising is more appropriate or has proved most popular under the following dualities:
1. A strong/weak market
2. A large/small amount of capital sought
A table and graph showing number or raisings and the total capital raised through the two methods would be another idea.
Here’s a start:
> Private placements are often used where there is an immediate need for capital (Amcor did US$500 million in late 2002). Note also that there is a restriction on private placements – I believe anything beyond 10% of capital requires shareholder approval.
> Rights issues are favoured by smaller companies and where the board seeks capital but does not want to skew the ownership structure. An interesting development recently is that the SPP (share purchase plan) is becoming relatively more widespread in use than the rights issue as a means to raise working capital.
In terms of timing, private placements are typically made in a strong market, as the new shares are often issued at a substantial discount to market – the cost of obtaining significant liquidity at short notice.
I’m actually meant to be paying attention to this lecture in International Financial Markets – so I best be off.
P.S. If you politely ask a member of the Finance Department a) what they are smoking, and b) if they can sell you some, it may put you in the correct frame of mind to understand whoever wrote the question.
Thanks PXW for the feedback – it was helpful to know I am on track. I think I’m going to be okay. After 5 hours of working on the assignment I really needed to vent.
Am trying to finish it all off right now!!
Hope you enjoyed your International Financial Markets Lecture!!!!
Talk soon.
Bah, there are many reasons why I avoid the financial. This has now become one of them. It will pass into my family legend: “Never do Finance, my grandchildren! When I was young, I read a blog entry about the evils of Introductory Finance assignments!” My grandchildren will then reply: “What is a blog, Grandmother?”
Surely its not that hard. I did intro micro and business in the global economy (Arts student) and went pretty well.
My brother never had THAT much trouble with Finance although when I looked through his Finance books over the past few years I was like: WTF! This stuff is crazy, how are you supposed to do and remember all this crazy stuff? He was really good at maths though…
Good luck with the assignment.
I thought you only spoke one language.
I take it back.
xo jez
That’s child’s play!
The question appears to be asking you to make a judgement, by looking at activity over the past 10 years as to which form of capital raising is more appropriate or has proved most popular under the following dualities:
1. A strong/weak market
2. A large/small amount of capital sought
A table and graph showing number or raisings and the total capital raised through the two methods would be another idea.
Here’s a start:
> Private placements are often used where there is an immediate need for capital (Amcor did US$500 million in late 2002). Note also that there is a restriction on private placements – I believe anything beyond 10% of capital requires shareholder approval.
> Rights issues are favoured by smaller companies and where the board seeks capital but does not want to skew the ownership structure. An interesting development recently is that the SPP (share purchase plan) is becoming relatively more widespread in use than the rights issue as a means to raise working capital.
In terms of timing, private placements are typically made in a strong market, as the new shares are often issued at a substantial discount to market – the cost of obtaining significant liquidity at short notice.
I’m actually meant to be paying attention to this lecture in International Financial Markets – so I best be off.
P.S. If you politely ask a member of the Finance Department a) what they are smoking, and b) if they can sell you some, it may put you in the correct frame of mind to understand whoever wrote the question.
Have fun!
PXW
Thanks PXW for the feedback – it was helpful to know I am on track. I think I’m going to be okay. After 5 hours of working on the assignment I really needed to vent.
Am trying to finish it all off right now!!
Hope you enjoyed your International Financial Markets Lecture!!!!
Talk soon.
xxx
PXW, I very much approve of the “P.S.”.
Bah, there are many reasons why I avoid the financial. This has now become one of them. It will pass into my family legend: “Never do Finance, my grandchildren! When I was young, I read a blog entry about the evils of Introductory Finance assignments!” My grandchildren will then reply: “What is a blog, Grandmother?”