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Death Spiral Financing
Death spiral financing is the result of a badly structured convertible financing used to fund primarily small cap companies in the marketplace, causing the company's stock to fall dramatically, which can lead to the company's ultimate downfall. Some small companies rely on selling convertible debt to large private investors (see private investment in public equity) to fund their operations and growth. This convertible debt, often convertible preferred stock or convertible debentures, can be converted to the common stock of the issuing company at a discount to the market value of the common stock at the time of each conversion. Under a “death spiral” scenario, the holder of the convertible debt might short the issuer's common stock, at which time the debt holder converts some of the convertible debt to common shares with which he then covers the debt holder's short position. The debt holder continues to sell short and cover with converted stock, which, along with selling ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Convertible Financing
In finance, a convertible bond, convertible note, or convertible debt (or a convertible debenture if it has a maturity of greater than 10 years) is a type of bond that the holder can convert into a specified number of shares of common stock in the issuing company or cash of equal value. It is a hybrid security with debt- and equity-like features. It originated in the mid-19th century, and was used by early speculators such as Jacob Little and Daniel Drew to counter market cornering. Convertible bonds are also considered debt security because the companies agree to give fixed or floating interest rate as they do in common bonds for the funds of investor. To compensate for having additional value through the option to convert the bond to stock, a convertible bond typically has a coupon rate lower than that of similar, non-convertible debt. The investor receives the potential upside of conversion into equity while protecting downside with cash flow from the coupon payments and t ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Small Cap Company
A small cap company is a company whose market capitalization ( shares x value of each share) is considered small. In the United States, this includes market caps from $250 million to $2 billion (as of 2022). Overview A small cap company typically has under $2 billion market cap. Small companies generally are not able to secure the best ( prime) borrowing rates and wield reduced power, including a smaller market share. Being small, they are also less financially stable than larger companies, and are more likely to become bankrupt. However, they do generally have more growth potential and over time have greater but more volatile expected returns. See also *Mega-cap, over $200 billion * Large-cap, $10 billion to $200 billion * Mid-cap, $2 billion to $10 billion * Micro-cap, $50 million to $250 million *Nano-cap, less than $50 million *List of public corporations by market capitalization *Market price * Authorised capital * Treasury stock * Market capitalization Market capital ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Stock
Stocks (also capital stock, or sometimes interchangeably, shares) consist of all the Share (finance), shares by which ownership of a corporation or company is divided. A single share of the stock means fractional ownership of the corporation in proportion to the total number of shares. This typically entitles the shareholder (stockholder) to that fraction of the company's earnings, proceeds from liquidation of assets (after discharge of all Seniority (financial), senior claims such as secured and unsecured debt), or Voting interest, voting power, often dividing these up in proportion to the number of like shares each stockholder owns. Not all stock is necessarily equal, as certain classes of stock may be issued, for example, without voting rights, with enhanced voting rights, or with a certain priority to receive profits or liquidation proceeds before or after other classes of Shareholder, shareholders. Stock can be bought and sold over-the-counter (finance), privately or on ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Convertible Debt
In finance, a convertible bond, convertible note, or convertible debt (or a convertible debenture if it has a maturity of greater than 10 years) is a type of bond that the holder can convert into a specified number of shares of common stock in the issuing company or cash of equal value. It is a hybrid security with debt- and equity-like features. It originated in the mid-19th century, and was used by early speculators such as Jacob Little and Daniel Drew to counter market cornering. Convertible bonds are also considered debt security because the companies agree to give fixed or floating interest rate as they do in common bonds for the funds of investor. To compensate for having additional value through the option to convert the bond to stock, a convertible bond typically has a coupon rate lower than that of similar, non-convertible debt. The investor receives the potential upside of conversion into equity while protecting downside with cash flow from the coupon payments a ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Private Investment In Public Equity
A private investment in public equity, often called a PIPE deal, involves the selling of publicly traded common shares or some form of preferred stock or convertible security to private investors. It is an allocation of shares in a public company not through a public offering in a stock exchange. PIPE deals are part of the primary market. In the U.S., a PIPE offering may be registered with the Securities and Exchange Commission on a registration statement or may be completed as an unregistered private placement. PIPE market The attractiveness of PIPE transactions has waxed and waned since the late 1990s. For private equity investors, PIPEs tend to become increasingly attractive in markets where control investments are harder to execute. Generally, companies are forced to pursue PIPEs when capital markets are unwilling to provide financing and traditional equity market alternatives do not exist for that particular issuer. According to market research in the US, 980 transacti ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Convertible Preferred Stock
A convertible or cabriolet () is a passenger car that can be driven with or without a roof in place. The methods of retracting and storing the roof vary across eras and manufacturers. A convertible car's design allows an open-air driving experience, with the ability to provide a roof when required. A potential drawback of convertibles is their reduced structural rigidity (requiring significant engineering and modification to counteract the side effects of almost completely removing a car's roof). The majority of convertible roofs are of a folding construction framework with the actual top made from cloth or other fabric. Other types of convertible roofs include retractable hardtops (often constructed from metal or plastic) and detachable hardtops (where a metal or plastic roof is manually removed and often stored in the trunk). Terminology Other terms for convertibles include cabriolet, cabrio, drop top, drophead coupé, open two-seater, open top, rag top, soft top, spid ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Convertible Debenture
In finance, a convertible bond, convertible note, or convertible debt (or a convertible debenture if it has a maturity of greater than 10 years) is a type of bond that the holder can convert into a specified number of shares of common stock in the issuing company or cash of equal value. It is a hybrid security with debt- and equity-like features. It originated in the mid-19th century, and was used by early speculators such as Jacob Little and Daniel Drew to counter market cornering. Convertible bonds are also considered debt security because the companies agree to give fixed or floating interest rate as they do in common bonds for the funds of investor. To compensate for having additional value through the option to convert the bond to stock, a convertible bond typically has a coupon rate lower than that of similar, non-convertible debt. The investor receives the potential upside of conversion into equity while protecting downside with cash flow from the coupon payments and t ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Common Stock
Common stock is a form of corporate equity ownership, a type of security. The terms voting share and ordinary share are also used frequently outside of the United States. They are known as equity shares or ordinary shares in the UK and other Commonwealth realms. This type of share gives the stockholder the right to share in the profits of the company, and to vote on matters of corporate policy and the composition of the members of the board of directors. The owners of common stock do not directly own any assets of the company; instead each stockholder owns a fractional interest in the company, which in turn owns the assets. As owners of a company, common stockholders are eligible to receive dividends from its recent or past earnings, proceeds from a sale of the company, and distributions of residual (left-over) money if it is liquidated. In general, common stockholders have lowest priority to receive payouts from the company. They may not receive dividends until the company ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Market Value
Market value or OMV (open market valuation) is the price at which an asset would trade in a competitive auction setting. Market value is often used interchangeably with ''open market value'', ''fair value'' or '' fair market value'', although these terms have distinct definitions in different standards, and differ in some circumstances. Definition International Valuation Standards defines market value as "the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion". Market value is a concept distinct from market price, which is "the price at which one can transact", while market value is "the true underlying value" according to theoretical standards. The concept is most commonly invoked in inefficient markets or disequilibrium situations where prevailing market prices a ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Short (finance)
In finance, being short in an asset means investing in such a way that the investor will profit if the market value of the asset falls. This is the opposite of the more common Long (finance), long Position (finance), position, where the investor will profit if the market value of the asset rises. An investor that sells an asset short is, as to that asset, a short seller. There are a number of ways of achieving a short position. The most basic is physical selling short or short-selling, by which the short seller Securities lending, borrows an asset (often a security (finance), security such as a share (finance), share of stock or a bond (finance), bond) and sells it. The short seller must later buy the same amount of the asset to return it to the lender. If the market price of the asset has fallen in the meantime, the short seller will have made a profit equal to the difference in price. Conversely, if the price has risen then the short seller will bear a loss. The short seller ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Cover (finance)
In finance, being short in an asset means investing in such a way that the investor will profit if the market value of the asset falls. This is the opposite of the more common long position, where the investor will profit if the market value of the asset rises. An investor that sells an asset short is, as to that asset, a short seller. There are a number of ways of achieving a short position. The most basic is physical selling short or short-selling, by which the short seller borrows an asset (often a security such as a share of stock or a bond) and sells it. The short seller must later buy the same amount of the asset to return it to the lender. If the market price of the asset has fallen in the meantime, the short seller will have made a profit equal to the difference in price. Conversely, if the price has risen then the short seller will bear a loss. The short seller usually must pay a borrowing fee to borrow the asset (charged at a particular rate over time, similar to ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Convertible Security
A convertible security is a financial instrument whose holder has the right to convert it into another security of the same issuer. Most convertible securities are convertible bonds or preferred stocks that pay regular interest and can be converted into shares of the issuer's common stock. Convertible securities typically include other embedded options, such as call or put options. Consequently, determining the value of convertible securities can be a complex exercise. The complex valuation issue may attract specialized professional investors, including arbitrageurs and hedge funds who try to exploit disparities in the relationship between the price of the convertible security and the underlying common stock. Types Types of convertible securities include: * Convertible bond *Reverse convertible bond * Convertible preferred stock * Asset-linked bond: Although a bond with an asset warrant is a type of convertible security, regular warrants are not. A regular warrant provides an ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
