Question 1

Briefly explain the term private placement.

Accepted Answer

When an entire issue of a security is so

Question 2

Shelf registration allows the firm to file a registration statement with the SEC to cover a series of subsequent issues.

Accepted Answer

A) True 
 B)False

Question 3

According to evidence from surveys of CFOs, the top-most motive for firms to go public is to

Accepted Answer

A) broaden the base of ownership. 
B) enhance the reputation of the firm. 
C) establish a market price/value for our firm. 
D) create public shares for use in future acquisitions. 
A) broaden the base of ownership. 
B) enhance the reputation of the firm. 
C) establish a market price/value for our firm. 
D) create public shares for use in future acquisitions.

Question 4

What are some of the costs to a firm associated with issuing new securities?

Accepted Answer

The most important cost is the underwrit

Question 5

SEC registration is not required when a company makes

Accepted Answer

A) a private placement of securities. 
B) a public offering of securities issue having a value less than $5 million and a maturity less than nine months. 
C) an issue of debt with a maturity less than nine months. 
D) both a private placement of securities and a public offering of securities issue having a value less than $5 million and a maturity less than nine months. 
A) a private placement of securities. 
B) a public offering of securities issue having a value less than $5 million and a maturity less than nine months. 
C) an issue of debt with a maturity less than nine months. 
D) both a private placement of securities and a public offering of securities issue having a value less than $5 million and a maturity less than nine months.

Question 6

Most financial economists attribute the drop in the price of equity subsequent to the announcement of a new issue to

Accepted Answer

A) an increase in the supply of shares. 
B) information effect. 
C) an increase in the supply of shares and information effect. 
D) neither an increase in the supply of shares nor information effect. 
A) an increase in the supply of shares. 
B) information effect. 
C) an increase in the supply of shares and information effect. 
D) neither an increase in the supply of shares nor information effect.

Question 7

A new public equity issue from a company with public equity previously outstanding is called a(n)

Accepted Answer

A) initial public offering (IPO). 
B) American depository receipt (ADR). 
C) seasoned equity offering (SEO). 
D) private placement. 
A) initial public offering (IPO). 
B) American depository receipt (ADR). 
C) seasoned equity offering (SEO). 
D) private placement.

Question 8

State laws that regulate sales of securities within the state are called

Accepted Answer

A) red herrings. 
B) registration laws. 
C) Rule 415 regulations. 
D) blue-sky laws. 
A) red herrings. 
B) registration laws. 
C) Rule 415 regulations. 
D) blue-sky laws.

Question 9

The following are advantages of shelf registration
I.securities can be issued in dribs and drabs without incurring excessive transaction costs;
II.securities can be issued on short notice;
III.security issues can be timed to take advantage of market conditions

Accepted Answer

A) I only 
B) II only 
C) III only 
D) I, II, and III 
A) I only 
B) II only 
C) III only 
D) I, II, and III

Question 10

The winner's curse is reduced in a(n)

Accepted Answer

A) discriminatory auction. 
B) uniform-price auction. 
C) English auction. 
D) winner-take-all auction. 
A) discriminatory auction. 
B) uniform-price auction. 
C) English auction. 
D) winner-take-all auction.

Question 11

Which of the following statements best describes shelf registration?

Accepted Answer

A) The issuance of securities to qualified institutional investors 
B) The enforcement of blue-sky laws 
C) The provision that allows large companies to file a single registration statement covering financing plans up to three years into the future 
D) Registration of the sale of securities in the primary market 
A) The issuance of securities to qualified institutional investors 
B) The enforcement of blue-sky laws 
C) The provision that allows large companies to file a single registration statement covering financing plans up to three years into the future 
D) Registration of the sale of securities in the primary market

Question 12

The stock exchange that specializes in trading the shares of young and rapidly growing companies is the

Accepted Answer

A) NASDAQ. 
B) NYSE. 
C) London Stock Exchange. 
D) Tokyo Stock Exchange. 
A) NASDAQ. 
B) NYSE. 
C) London Stock Exchange. 
D) Tokyo Stock Exchange.

Question 13

Generally, venture capital funds are organized as
I.proprietorships;
II.corporations;
III.limited private partnerships

Accepted Answer

A) I only 
B) II only 
C) III only 
D) I and II only 
A) I only 
B) II only 
C) III only 
D) I and II only

Question 14

Briefly discuss SEC rule 144A.

Accepted Answer

SEC rule 144A allows large financial ins

Question 15

Wealthy individuals who provide equity investment for new firms are called
I.white knights;
II.red herrings;
III.angel investors

Accepted Answer

A) I only 
B) I and II only 
C) III only 
D) II only 
A) I only 
B) I and II only 
C) III only 
D) II only

Question 16

Briefly explain the basic procedure for a new issue.

Accepted Answer

The rules governing the sale of securiti

Question 17

The market for venture capital refers to the
I.private financial marketplace for providing equity investment for small, start-up firms;
II.bond market;
III.market for providing equity to well-established firms

Accepted Answer

A) I only 
B) II only 
C) II and III only 
D) III only 
A) I only 
B) II only 
C) II and III only 
D) III only

Question 18

Generally, IPOs are overpriced and are subject to the winner's curse.

Accepted Answer

A) True 
 B)False

Question 19

An equity issue sold to the firm's existing stockholders is called a

Accepted Answer

A) rights offer. 
B) general cash offer. 
C) private placement. 
D) discriminatory-price auction. 
A) rights offer. 
B) general cash offer. 
C) private placement. 
D) discriminatory-price auction.

Question 20

Arrange the following in chronological order for a typical start-up firm:
I.VC financing;
II.mezzanine financing;
III.stage 1, 2, 3, 4, etc.,financing;
IV.IPO

Accepted Answer

A) I, II, III, and IV 
B) I, III, II, and IV 
C) IV, I, II, and III 
D) III, I, II, and IV 
A) I, II, III, and IV 
B) I, III, II, and IV 
C) IV, I, II, and III 
D) III, I, II, and IV

Exam 15: How Corporations Issue Securities

Briefly explain the term private placement.

Shelf registration allows the firm to file a registration statement with the SEC to cover a series of subsequent issues.

According to evidence from surveys of CFOs, the top-most motive for firms to go public is to

What are some of the costs to a firm associated with issuing new securities?

SEC registration is not required when a company makes

Most financial economists attribute the drop in the price of equity subsequent to the announcement of a new issue to

A new public equity issue from a company with public equity previously outstanding is called a(n)

State laws that regulate sales of securities within the state are called

The following are advantages of shelf registration I.securities can be issued in dribs and drabs without incurring excessive transaction costs; II.securities can be issued on short notice; III.security issues can be timed to take advantage of market conditions

The winner's curse is reduced in a(n)

Which of the following statements best describes shelf registration?

The stock exchange that specializes in trading the shares of young and rapidly growing companies is the

Generally, venture capital funds are organized as I.proprietorships; II.corporations; III.limited private partnerships

Briefly discuss SEC rule 144A.

Wealthy individuals who provide equity investment for new firms are called I.white knights; II.red herrings; III.angel investors

Briefly explain the basic procedure for a new issue.

The market for venture capital refers to the I.private financial marketplace for providing equity investment for small, start-up firms; II.bond market; III.market for providing equity to well-established firms

Generally, IPOs are overpriced and are subject to the winner's curse.

An equity issue sold to the firm's existing stockholders is called a

Arrange the following in chronological order for a typical start-up firm: I.VC financing; II.mezzanine financing; III.stage 1, 2, 3, 4, etc.,financing; IV.IPO

Introduction to Corporate Finance

How to Calculate Present Values

Valuing Bonds

The Value of Common Stocks

Net Present Value and Other Investment Criteria

Making Investment Decisions With the Net Present Value Rule

Introduction to Risk and Return

Portfolio Theory and the Capital Asset Pricing Model

Risk and the Cost of Capital

Project Analysis

How to Ensure That Projects Truly Have Positive Npvs

Agency Problems and Investment

Efficient Markets and Behavioral Finance

An Overview of Corporate Financing

Payout Policy

Does Debt Policy Matter

How Much Should a Corporation Borrow

Financing and Valuation

Understanding Options

Valuing Options

Real Options

Credit Risk and the Value of Corporate Debt

The Many Different Kinds of Debt

Leasing

Managing Risk

Managing International Risks

Financial Analysis

Financial Planning

Working Capital Management

Mergers

Corporate Restructuring

Governance and Corporate Control Around the World

Filters