Exam 14: Raising Equity Capital

At what stage of the IPO process do senior management and the lead underwriters travel to promote the company and explain their rationale for the offer price to the underwriters' largest customers?

When a company founder sells stock to outside investors in order to raise capital,the share of the company owned by the founder and the founder's control over the company will be reduced.

Use the information for the question(s) below. You founded your own firm three years ago. You initially contributed $200,000 of your own money and in return you received 2 million shares of stock. Since then, you have sold an additional 1 million shares of stock to angel investors. You are now considering raising capital from a venture capital firm. This venture capital firm would invest $5 million and would receive 2 million newly issued shares in return. -After the venture capitalist's investment,the post-money valuation of your shares are closest to:

Which of the following is a notable puzzle in IPOs?

As part of the registration statement ,the preliminary prospectus circulates to investors before the stock is offered.This preliminary prospectus is also called a(n)

Use the information for the question(s) below. Luther Industries is in the process of selling shares of stock in an auction IPO. At the end of the bidding period, Luther's investment bank has received the following bids: -What are some of the disadvantages of going public?

Use the information for the question(s) below. You founded your own firm three years ago. You initially contributed $200,000 of your own money and in return you received 2 million shares of stock. Since then, you have sold an additional 1 million shares of stock to angel investors. You are now considering raising capital from a venture capital firm. This venture capital firm would invest $5 million and would receive 2 million newly issued shares in return. -Suppose you had sold the 1 million shares to the angel investor for $500,000.What would have been your percentage ownership in the company immediately following the angel investor's investment?

Use the information for the question(s) below. Luther Industries is in the process of selling shares of stock in an auction IPO. At the end of the bidding period, Luther's investment bank has received the following bids: -The proceeds from the IPO be if Luther is selling 1.25 million shares is closest to:

Nature's Bounty,an organic seed company,is seeking to grow from a small company selling seeds in local markets into a company that sells seeds across several states.The funding for this expansion comes from a wealthy individual who uses his considerable inherited wealth to fund a variety of eco-friendly businesses.Which of the following best describes this individual's relationship with Nature's Bounty?

Which of the following statements regarding best efforts IPOs is most accurate?

An equity issue that raises new funds for a publicly traded company is called

Yukon Gold Inc.stock trades at $37 per share and there are 18 million shares outstanding.The management would like to raise $40 million in an SEO.If the underwriter charges 5% of gross proceeds,and all the shares are primary shares sold to new investors,what percentage of the company will be owned by the new investors?

Manitoba Marketing sells 8 million shares of stock in an SEO,with 5 million being primary shares issued by the company and 3 million being secondary shares sold by investors in the company.At the time of the sale,the firm's stock was selling at $16 per share.If the underwriter charges 5% of the gross proceeds as a fee,how much money was raised in the sale?

What are the four IPO puzzles?

The Ontario Teachers' Pension Plan is a pension fund for public school teachers in the province of Ontario.It has a large and diverse portfolio of investments,both in Canada and internationally,and had net assets in December 2012 of $108.5 billion.Which of the following best describes the Ontario Teachers' Pension Plan?

Use the information for the question(s) below. Luther Industries is in the process of selling shares of stock in an auction IPO. At the end of the bidding period, Luther's investment bank has received the following bids: -What are some of the highlights of Google's IPO process?

The founder of a company currently holds 12 million of the 15 million shares in that company.She considers an IPO where she sells a mix of primary shares and 2 million of her own secondary shares for $18 per share.If she wants to retain a 60% ownership of the company,how much money can she raise in this IPO?

What advantages do venture capital firms offer limited partners compared to investing directly in start-ups themselves as angel investors?

Use the table for the question(s) below. The founder of a company issues 100,000 shares of series A stock for his own $250,000 investment. He then goes through three further rounds of investment, as shown below: -What is the post-money valuation for the series D funding round?

Which of the following best describes those shares sold when a company goes public which raise new capital?