This essay has been submitted by a student. This is not an example of the work written by professional essay writers.
Uncategorized

Marketability Premium

Pssst… we can write an original essay just for you.

Any subject. Any type of essay. We’ll even meet a 3-hour deadline.

GET YOUR PRICE

writers online

Marketability Premium

Marketability premiums can be indicated to be an extra interest rate that is charged by investors to companies that are dealing with stocks, bonds, and securities that are not easy to sell. All organizations that deal with low moving but highly profitable products are required to pay this premium to the loan issuing firms when paying back their loan. In most cases, it is indicated that the uncertainty that the organization has on the demand of a product is the one that determines whether the company should or should not pay the premium.  The size of the company is the primary determinate of the amount of marketability premium to be paid. At the same time, the companies whose securities or bonds have lower marketability pay more compared to those with higher marketability.  The value is calculated by subtracting the risk-free rates from the anticipated equity market return.

There are reasons to why the issuing companies have to pay this premium. To begin with, they pay to increase the number of investors purchasing their securities who turns to be their potential customers. Therefore, it is used as a way of motivating and attracting investors as it is seen as a form of discount since most investors prefer to invest in securities that are profoundly moving as they are easy to convert to cash without losing value. Also, because their security is less marketable and most investors prefer the ones with more marketability as less marketable securities loss value easily.

  Remember! This is just a sample.

Save time and get your custom paper from our expert writers

 Get started in just 3 minutes
 Sit back relax and leave the writing to us
 Sources and citations are provided
 100% Plagiarism free
error: Content is protected !!
×
Hi, my name is Jenn 👋

In case you can’t find a sample example, our professional writers are ready to help you with writing your own paper. All you need to do is fill out a short form and submit an order

Check Out the Form
Need Help?
Dont be shy to ask