Question 1

Most public issues must be registered with the SEC, and the company may not sell securities until the SEC has approved its registration statement.

Accepted Answer

A) True 
 B)False

Question 2

Venture capital investment was highest in the year

Accepted Answer

A) 1999. 
B) 2000. 
C) 2003. 
D) 2005. 
A) 1999. 
B) 2000. 
C) 2003. 
D) 2005.

Question 3

Briefly explain the term venture capital.

Accepted Answer

Equity investment in start-up private co

Question 4

A business plan generally contains a description of
I.the proposed products;
II.the potential market;
III.the underlying technology;
IV.resources needed

Accepted Answer

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

Question 5

What term might be used to describe an underwriter who influences an analyst in the same firm to modify a report so as to create a favorable impression of a securities issue?

Accepted Answer

A) SOX compliance 
B) Spinning 
C) Conflict of interest 
D) Chinese wall 
A) SOX compliance 
B) Spinning 
C) Conflict of interest 
D) Chinese wall

Question 6

A rights issue is also called a(n)

Accepted Answer

A) private placement. 
B) shelf registration. 
C) initial public offering (IPO). 
D) privileged subscription. 
A) private placement. 
B) shelf registration. 
C) initial public offering (IPO). 
D) privileged subscription.

Question 7

Explain the term winner's curse.

Accepted Answer

The highest bidder in an aucti

Question 8

Which of the following is a possible exception to the efficient-market theory?

Accepted Answer

A) Underwriters charge investors more for IPO shares than they pay the issuing firms. 
B) IPO spreads are lower on larger issues. 
C) The issuance of equity is interpreted as an unfavorable signal by investors. 
D) The long-run returns of IPOs tend to underperform the market. 
A) Underwriters charge investors more for IPO shares than they pay the issuing firms. 
B) IPO spreads are lower on larger issues. 
C) The issuance of equity is interpreted as an unfavorable signal by investors. 
D) The long-run returns of IPOs tend to underperform the market.

Question 9

According to the data, venture capital funds earn an average annual rate of return of about

Accepted Answer

A) 32 percent. 
B) 24 percent. 
C) 17 percent. 
D) 12 percent. 
A) 32 percent. 
B) 24 percent. 
C) 17 percent. 
D) 12 percent.

Question 10

Large firms like Intel that provide equity capital to new innovative companies are called

Accepted Answer

A) angel investors. 
B) corporate venturers. 
C) white knights. 
D) mezzanine financiers. 
A) angel investors. 
B) corporate venturers. 
C) white knights. 
D) mezzanine financiers.

Question 11

The SEC provision under which qualified institutional investors can trade privately placed securities among themselves is called

Accepted Answer

A) Rule 144A. 
B) Rule 415. 
C) the Sarbanes-Oxley Act. 
D) None of these options. 
A) Rule 144A. 
B) Rule 415. 
C) the Sarbanes-Oxley Act. 
D) None of these options.

Question 12

Firms looking to raise funds will file registration statements with the

Accepted Answer

A) Federal Reserve Board (FE
D) . 
B) Office of the Comptroller of the Currency (OC
C) . 
C) Securities and Exchange Commission (SE
C) . 
D) Public Company Accounting Oversight Board (PCAO
B) . 
A) Federal Reserve Board (FE
D) . 
B) Office of the Comptroller of the Currency (OC
C) . 
C) Securities and Exchange Commission (SE
C) . 
D) Public Company Accounting Oversight Board (PCAO
B) .

Question 13

Generally, which of the following issues have the lowest total direct costs of issuing as a percentage of gross proceeds?

Accepted Answer

A) Initial public offerings (IPOs) 
B) Seasoned equity offerings (SEOs) 
C) Convertible bonds 
D) Straight bonds 
A) Initial public offerings (IPOs) 
B) Seasoned equity offerings (SEOs) 
C) Convertible bonds 
D) Straight bonds

Question 14

The very first public equity sold by a company is referred to as

Accepted Answer

A) a rights issue. 
B) American depositing receipts (ADRs). 
C) an initial public offering (IPO). 
D) a seasoned equity offering (SEO). 
A) a rights issue. 
B) American depositing receipts (ADRs). 
C) an initial public offering (IPO). 
D) a seasoned equity offering (SEO).

Question 15

Rule 144A allows large financial institutions to trade unregistered securities among themselves.

Accepted Answer

A) True 
 B)False

Question 16

The average initial returns from investing in IPOs is the highest in

Accepted Answer

A) Denmark. 
B) China. 
C) Italy. 
D) Mexico. 
A) Denmark. 
B) China. 
C) Italy. 
D) Mexico.

Question 17

Explain the need for a firewall between underwriters and analysts.

Accepted Answer

Underwriters are in the business of sell

Question 18

If a shareholder or an investor wants to acquire a new share of stock under a rights issue, he or she must

Accepted Answer

A) buy call options on the stock. 
B) acquire the appropriate number of rights per share and subscription price per share and submit them to the subscription agent. 
C) acquire the correct number of rights per share and submit them to the subscription agent. 
D) register his or her order with the NYSE. 
A) buy call options on the stock. 
B) acquire the appropriate number of rights per share and subscription price per share and submit them to the subscription agent. 
C) acquire the correct number of rights per share and submit them to the subscription agent. 
D) register his or her order with the NYSE.

Question 19

Mezzanine financing must come in the third stage.

Accepted Answer

A) True 
 B)False

Question 20

The main reason for the recent migration of a large number of firms from public-to-private ownership is

Accepted Answer

A) blue-sky laws. 
B) Sarbanes-Oxley Act. 
C) International Accounting Standards (IAS). 
D) advent of shelf registration. 
A) blue-sky laws. 
B) Sarbanes-Oxley Act. 
C) International Accounting Standards (IAS). 
D) advent of shelf registration.

Exam 15: How Corporations Issue Securities

Most public issues must be registered with the SEC, and the company may not sell securities until the SEC has approved its registration statement.

Venture capital investment was highest in the year

Briefly explain the term venture capital.

A business plan generally contains a description of I.the proposed products; II.the potential market; III.the underlying technology; IV.resources needed

What term might be used to describe an underwriter who influences an analyst in the same firm to modify a report so as to create a favorable impression of a securities issue?

A rights issue is also called a(n)

Explain the term winner's curse.

Which of the following is a possible exception to the efficient-market theory?

According to the data, venture capital funds earn an average annual rate of return of about

Large firms like Intel that provide equity capital to new innovative companies are called

The SEC provision under which qualified institutional investors can trade privately placed securities among themselves is called

Firms looking to raise funds will file registration statements with the

Generally, which of the following issues have the lowest total direct costs of issuing as a percentage of gross proceeds?

The very first public equity sold by a company is referred to as

Rule 144A allows large financial institutions to trade unregistered securities among themselves.

The average initial returns from investing in IPOs is the highest in

Explain the need for a firewall between underwriters and analysts.

If a shareholder or an investor wants to acquire a new share of stock under a rights issue, he or she must

Mezzanine financing must come in the third stage.

The main reason for the recent migration of a large number of firms from public-to-private ownership is

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