How does Fiat FCA raise capital? Does Fiat FCA sell stock or bonds in more than...
How does Fiat FCA raise capital? Does Fiat FCA sell stock or bonds in more than one country? How does diversification of financing affect the cost of capital, the risk, and the value of the firm?
Homework Answers
Fiat Ford Chrysler Automobiles (FCA) raises capital through sale of its equity stocks and bonds in capital market. The automobile giant collected over $1.07 billion funds from the sale of 100 million stocks and $2.8 billion from sale of bonds in the open capital market. Majority of Fiat FCA's bond offerings were purchased by Exor, an investment company controlled by Agnelli Group of industries.
Fiat FCA NV runs its business in various regions of the world such as North America, Pacific Asia, Middle East, Europe and Africa. The Fiat FCA's shares and bonds are listed in leading stock exchanges of the world such as Dow Jones, Nasdaq, FTSE 100, Nikkei, Asia Dow, Shanghai and Singapore and raises capital for its operation and expansion activities through sales of its bonds and shares in more than one country.
Diversification of financing is generating capital resources by a firm through various sources such as bonds, shares and strategic sale. Every source of financing involves some cost of capital to a firm and also some potential risks for investors. Companies raises fund either through sale of equity stocks or bonds or both. Raising funds through sale of bonds or strategic sale of company's equity is safer mode of capital financing for the firms. But firms should also weigh the potential risk of high debt burden of the company and commissions payable to business partners. The equity capital financing involves high degree of risks for the investors due to the volatility of stock markets. Before making any investment plan through capital financing, a firm must weigh potential risks of the company and investors both. A balanced and diversified capital borrowing significantly reduces the risks and increase the assets valuation of a firm.
Add Answer to:
How does Fiat FCA raise capital? Does Fiat FCA sell stock or
bonds in more than...
Politically and based on other factors, does FIAT FCA establish subsidiary in the foreign country rather...
Politically and based on other factors, does FIAT FCA establish subsidiary in the foreign country rather than continued exporting. Identify the disadvantages and advantages associated with establishing a subsidiary in Italy. Are there economic comparative advantages? What are cost related or revenue related motives which drive FIAT? What are the barriers to direct foreign investment that the company has overcome?
Based on the text and your research of FIAT FCA, how has the capital structure decision...
Based on the text and your research of FIAT FCA, how has the capital structure decision making and the cost of capital been impacted by the global financial markets? What additional factors had to be considered? Give specific examples.
The Cost of Capital: Introduction Companies issue bonds, preferred stock, and common equity to raise capital...
The Cost of Capital: Introduction
Companies issue bonds, preferred stock, and common equity to
raise capital to invest in capital budgeting projects. Capital is a
necessary factor of production, and like any other factor, it has a
cost. This cost is equal to the -Select-security analyst'smarginal
investor'scompany vendor'sItem 1 required return on the applicable
security. The rates of return that investors require on bonds,
preferred stocks, and common equity represent the costs of those
securities to the firm. Companies estimate...
Koffman Corporation is trying to raise capital. What method would be the least risky to raise...
Koffman Corporation is trying to raise capital. What method would be the least risky to raise capital if it has a less-than-favorable credit rating? Bond issuance, since nobody wants to buy shares of a company with a less-than-perfect credit rating, Bond issuance, since additional debt can provide the company with more leverage. Stock issuance, since a credit rating won't negatively affect Koffman's ability to sell stock. With low credit, Koffman doesn't have any options for raising capital.
Why do companies choose to raise capital by borrowing versus issuing stock?Is borrowing more expensive than...
Why do companies choose to raise capital by borrowing versus issuing stock?Is borrowing more expensive than issuing stock or less expensive?
The cost of raising capital with debt is typically less costly for a firm than raising...
The cost of raising capital with debt is typically less costly for a firm than raising capital with preferred stock. Which one of the following is one of the reasons for this? Preferred stocks are more senior than bonds. Interest is a tax-deductible cost, preferred dividends are not. Bonds generally have a longer maturity than preferred stocks. The interest from bonds is compounded more frequently than the dividends from preferred stocks.
Which of the following statements is true? Equity is more costly to raise than debt because...
Which of the following statements is true? Equity is more costly to raise than debt because IPOs take a long time to organize Debt is more costly to raise than equity because it is riskier, thereby requiring higher returns Equity is more costly to raise than debt because it is riskier, thereby requiring higher returns Debt is more costly to raise than equity because the bond market is illiquid What is the goal of the Firm? To maximize shareholder value...
Dusness Finance.5 credit MICSL Rdles 6. A capital market helps businesses (1 point) raise funds with...
Dusness Finance.5 credit MICSL Rdles 6. A capital market helps businesses (1 point) raise funds with a maturity date longer than one year. reduce capital gains losses. capitalize on interest. sell their products 7. A firm that uses real estate, or some other tangible asset, to secure borrowed money has a bond Eurobond mortgage convertible debenture 8. The inflation is the premium expected to compensate for the price change expected due to risk premium inflation premium real rate of retum...
Turnbull Co. has a target capital structure of 58% debt, 6% preferred stock, and 36% common...
Turnbull Co. has a target capital structure of 58% debt, 6% preferred stock, and 36% common equity. It has a before-tax cost of debt of 11.1%, and its cost of preferred stock is 12.2%. If its current tax rate is 40%, how much higher will Turnbull's weighted average cost of capital (WACC) be if it has to raise additional common equity capital by issuing new common stock instead of raising the funds through retained earnings? If Tumbull can raise all...
true or false: zero coupon bonds sometimes sell for more than their face value.
true or false: zero coupon bonds sometimes sell for more than their face value.
The Cost of Capital: Introduction
Companies issue bonds, preferred stock, and common equity to
raise capital to invest in capital budgeting projects. Capital is a
necessary factor of production, and like any other factor, it has a
cost. This cost is equal to the -Select-security analyst'smarginal
investor'scompany vendor'sItem 1 required return on the applicable
security. The rates of return that investors require on bonds,
preferred stocks, and common equity represent the costs of those
securities to the firm. Companies estimate...
Koffman Corporation is trying to raise capital. What method would be the least risky to raise capital if it has a less-than-favorable credit rating? Bond issuance, since nobody wants to buy shares of a company with a less-than-perfect credit rating, Bond issuance, since additional debt can provide the company with more leverage. Stock issuance, since a credit rating won't negatively affect Koffman's ability to sell stock. With low credit, Koffman doesn't have any options for raising capital.
Dusness Finance.5 credit MICSL Rdles 6. A capital market helps businesses (1 point) raise funds with a maturity date longer than one year. reduce capital gains losses. capitalize on interest. sell their products 7. A firm that uses real estate, or some other tangible asset, to secure borrowed money has a bond Eurobond mortgage convertible debenture 8. The inflation is the premium expected to compensate for the price change expected due to risk premium inflation premium real rate of retum...
Turnbull Co. has a target capital structure of 58% debt, 6% preferred stock, and 36% common equity. It has a before-tax cost of debt of 11.1%, and its cost of preferred stock is 12.2%. If its current tax rate is 40%, how much higher will Turnbull's weighted average cost of capital (WACC) be if it has to raise additional common equity capital by issuing new common stock instead of raising the funds through retained earnings? If Tumbull can raise all...
Most questions answered within 3 hours.
-
what is employee/ employer relations ?
why is Employee/ Employer relation is important in the context...
asked 9 minutes ago -
Explain the relationship between tests of acquisition and
payment cycle and tests of accounts payable. Give...
asked 7 minutes ago -
A hot-air balloon is descending with a velocity of (−2.00m/s)y^.
A champagne bottle is opened to...
asked 26 minutes ago -
1. When a nearsighted person looks at an object that is in the
distance with their...
asked 1 hour ago -
QUESTION 8
Both of these statements will store the same value in the
variable $number
$number...
asked 2 hours ago -
The price of 1 lb of potatoes is $1.75. If all the potatoes sold
today at...
asked 3 hours ago -
Garcia Company issues 20.00%, 15-year bonds with a par value of
$470,000 and semiannual interest payments....
asked 3 hours ago -
In C++ Programming, Try using loops only.
This lab demonstrates the use of the While Loop...
asked 3 hours ago -
Effect of DCMU and sodium azide on Chlamydomonas? We did an
experiment where we had Chlamydomonas...
asked 4 hours ago -
1a) According to the ideal gas law, _______________.
a. a gas has infinite volume at absolute...
asked 6 hours ago -
Oakdale Fashions, Inc. had $245,000 in 2018 taxable income.
Using the tax schedule in Table 2.3...
asked 6 hours ago -
The marketing class at CSUS had an average score of 150. An
educational analyst determined that...
asked 7 hours ago