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CS Professional · Strategic Management and Corporate Finance · Raising of Funds - Private Funding

Which of the following is a typical feature that distinguishes private funding of a company from a public issue of securities?

Private funding is raising money from a select group of identified investors on negotiated terms, rather than inviting the general public. Public issues use an open prospectus, retail subscription and listing, so those features describe public funding, not private funding.

  1. AFunds are raised by inviting the general public through a prospectus open to all
  2. BFunds are raised from a select group of identified investors through negotiated termsCorrect
  3. CShares must necessarily be listed on a recognised stock exchange immediately
  4. DSubscription is open to any retail investor through the application-supported-by-blocked-amount facility

Explanation

Private funding means raising capital from a limited, identified set of investors such as promoters, institutions, venture funds or banks, on negotiated terms. Public offers invite the general public, with a prospectus open to all and usually listing. The other options describe features of a public issue.

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