Case Study (Preamble) Adusa Company has been in business for many years. The company is hoping to obtain financing for i

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Case Study (Preamble) Adusa Company has been in business for
many years. The company is hoping to obtain financing for its
upcoming project and wishes to hold on to this money for as long as
the business exists, not as a loan though. In considering the
options available and as first-timers on the financial markets,
they were advised by Urata Investment Bank Ltd, who took charge of
the processing for the attainment of the finance. With a consistent
dividend payment and a good share price on the market, Adusa finds
itself among the top-ranked on the local stock market. After 6
years of experiencing the organized market as a public company,
Adusa Company is back on the market to raise additional financing
to boost operations on the Olumba road construction, a contract
they won due to links with the government and the fact that they
could pre-finance projects, but this time, it is looking for an
institutional investor (since there is none in their existing
shareholder(s) profile) to subscribe to the equity capital they
intend to raise. Kwame and Jojo are co-workers with Adusa company
and have been saving part of their salaries in their bank accounts.
It is becoming difficult to prevent themselves from spending these
savings, so they are thinking of trading on financial markets. Jojo
is risk-averse and not too comfortable with the price volatility of
the stock market(s). Kwame loves risk and is looking forward to
challenging himself for higher yield. The stock market is open with
diverse options and these friends are game to trade.
Use the above case study to answer the questions below;
a) What unit of money supply is Adusa Company representing? b)
As the head of the investment banking unit of Urata Bank, explain
in detail to Adusa Company the equity offering available to augment
their financing. c) Which market would be appropriate for Adusa
Company in this offer? d) Outline any three(3) functions performed
by institutions in the category of Urata Investment Bank in the
financial market e) What is the appropriate means for Adusa Company
in their second attempt at raising equity financing considering the
fact that they wanted an institutional buyer? f) Explain this mode
or means of raising equity capital g) Which type of financial
instrument would be appropriate for Jojo? h) Which type of
financial instrument would be appropriate for Kwame?