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Question

Which of the following is a method of floatation?


A

All of these

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B

Private Placement

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C

Offer through prospectus

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D

Offer for sale

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Solution

The correct option is A

All of these


There are various methods of floating new issues in the primary market:

(i) Offer Through Prospectus This involves inviting subscription from the public through issue of prospectus.

(ii) Offer for Sale Under this method securities are not issued directly to the public but offered for sale through intermediaries like issuing houses or stock brokers.

(iii) Private Placement Private placement is the allotment of securities by a company to institutional investors and some selected individuals.

(iv) Rights Issue This is a privilege given to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company.

(v) e-IPOs A company proposing to issue capital to the public through the on-line system of the stock exchange has to enter into an agreement with the stock exchange.


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