why are shares issued at a discount , being a loss to the firm?
Aswin,
lmLet me put you a question, before providing the answer to the above question. Why sellers offer goods on discount?. I mean what's the need, even when the sellers know that offering discount will put them to bear loss. The two questions are quite similar; isn't it? Of-course, like a seller, a company also knows about the loss it is going to bear with making offer at discount. But at the same time, such a offer is lucrative for the applicants and they will apply for the shares. This will pull-up the demand for the shares of the concerned company and the company can fulfil its capital requirements quickly. You can say, generally, company offers shares att discount, when it requires immediate capital requirements and when its goodwill is not so fair in the market.
lmLet me put you a question, before providing the answer to the above question. Why sellers offer goods on discount?. I mean what's the need, even when the sellers know that offering discount will put them to bear loss. The two questions are quite similar; isn't it? Of-course, like a seller, a company also knows about the loss it is going to bear with making offer at discount. But at the same time, such a offer is lucrative for the applicants and they will apply for the shares. This will pull-up the demand for the shares of the concerned company and the company can fulfil its capital requirements quickly. You can say, generally, company offers shares att discount, when it requires immediate capital requirements and when its goodwill is not so fair in the market.