Capital Market Question: Download Questions PDF
What are the advantages and risks associated with Deep Discount?
Answer:
Following are the advantages:
1. In this the bond it doesn't require any assistance of brokers or underwriters because of their inexpensiveness and there consumption of time.
2. For risky business private placements might be the only source of capital available.
3. Picking of the investors with the specific goals and interest is the job of this kind of bond as it also enables small business owners to choose for the same.
The Risks are as follows:-
1) Investors in this case will have difficulty in locating themselves as they might be having the limited funds to invest.
2) Private companies place the securities and sell them below their market value or on deep discount.
1. In this the bond it doesn't require any assistance of brokers or underwriters because of their inexpensiveness and there consumption of time.
2. For risky business private placements might be the only source of capital available.
3. Picking of the investors with the specific goals and interest is the job of this kind of bond as it also enables small business owners to choose for the same.
The Risks are as follows:-
1) Investors in this case will have difficulty in locating themselves as they might be having the limited funds to invest.
2) Private companies place the securities and sell them below their market value or on deep discount.
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