Traditional areas of need may what does it take to become an investment banker for capital asset acquirement – new machinery or the construction of a new building or depot. The development of new products can be enormously costly and here again capital may be required. Normally, such developments are financed internally, whereas capital for the acquisition of machinery may come from external sources.
Ordinary shares are issued to the owners of a company. The market value of a quoted company’s shares bears no relationship to their nominal value, except that when ordinary shares are issued for cash, the issue price must be equal to or be more than the nominal value of the shares. Simply retaining profits, instead of paying them out in the form of dividends, offers an important, simple low-cost source of finance, although this method may not provide enough funds, for example, if the firm is seeking to grow. The company might want to raise more cash. Offers for sale: An offer for sale is a means of selling the shares of a company to the public. An unquoted company may issue shares, and then sell them on the Stock Exchange, to raise cash for the company.
All the shares in the company, not just the new ones, would then become marketable. Shareholders in an unquoted company may sell some of their existing shares to the general public. Loan stock Loan stock is long-term debt capital raised by a company for which interest is paid, usually half yearly and at a fixed rate. Holders of loan stock are therefore long-term creditors of the company.