Practicing Success

Target Exam

CUET

Subject

Entrepreneurship

Chapter

Resource Mobilisation

Question:
Which of the following is/are a disadvantage (s) of raising share capital through the Primary Market?
Options:
Suffering a loss of privacy as a result of media interest.
Need to maintain dividend and profit growth trends .
Becoming more vulnerable to an unwelcome takeover.
All of the above.
Correct Answer:
All of the above.
Explanation:
While there are benefits to going public, it also means additional obligations and reporting requirements such as:
 Increasing accountability to public shareholders
 Need to maintain dividend and profit growth trends
 Becoming more vulnerable to an unwelcome takeover
 Need to observe and adhere strictly to the rules and regulations by governing bodies Increasing costs in complying with higher level of reporting requirements
 Relinquishing some control of the company following the public offering
 Suffering a loss of privacy as a result of media interest