CFA Level I · CFA Level I Exam · Equity Instrument Features
A founder-owned company with 10 shareholders is considering listing on a stock exchange. Which outcome is most likely after the listing?
Listing most likely gives the company greater ability to raise additional capital from a broad investor base. Public status adds liquidity and market access, but also increases disclosure and compliance costs and usually dilutes the founder's control over decisions.
- ALower ongoing reporting and compliance costs
- BGreater ability to raise additional capital from a broad investor baseCorrect
- CGreater control for the founder over strategic decisions
Explanation
Listing broadens access to capital and provides liquidity to shareholders. However, it raises reporting and compliance costs and typically dilutes founder control, making the other options wrong.
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