homework concept questions
jerilu markets has a beta of 1.09. the risk free rate of return is 3.18% and the market rate of return is 11.27%. what is the risk premium on this stock
8.82 = 1.09 (.1127 - .0318) = .0882
the raising of small amounts of capital from a large number of people is known as:
crowdfunding
direct business loans typically ranging from one to five years are called
term loans
the risk free rate of return is 2.7%, the inflation rate is 3.1%, and the market risk premium is 6.9%. what is the expected rate of return on a stock with a beta of 1.08?
10.15% =.027 + 1.08(.069) = .1015
shelf registration allows a firm to register multiple issues at one time with the SEC and then sell those registered shares anytime during the subsequent:
2 years
when a firm announces an upcoming seasoned stock offering, the market price of the firms existing shares tends to:
decrease
blue stone builders recently offered to sell 45,000 newly issued shares of stock to the public. the underwriters charged a fee of 8.2% and paid blue stone builders the uniform auction price for each of those shares. what best describes this underwriting
dutch auction
jones and co. recently went public and received $23.07 a share on their entire offer of 30,000 shares. keeper and co. served as the underwriter and sold 28,500 shares to the public at an offer price of $26.50 a share. what type of underwriting was this?
firm commitment
mobile units recently offered 75,000 new shares of stock for sale. the underwriters sold a total of 78,500 shares to the public at a price of $16 a share. the additional 3,500 shares were purchased in accordance with:
green shoe provision
the difference between the underwriters' cost of buying shares in a firm commitment and the offering price of those securities to the public is called the
gross spread
a syndicate can best be defined as a
group of underwriters sharing the risk of selling a new issue of securities
JKL is a partnership that was formed two years ago and has been extremely successful thus far. the owners have decided to incorporate and offer shares of stock to the general public. what is this type of equity offering called?
initial public offering
a firm will generally receive a fair price when
its issues new shares of stock if the market is efficient
venture capitalist should have
key contacts and financial strength
with firm commitment underwriting, the issuing firm:
knows upfront the amount of money it will receive from the stock offering
equity financing of new, non-public companies is broadly referred to as:
private equity
the high-end mutual fund recently loaned $13.6 million to Henderson hardware for 15 years at 6.8% interest. this loan is best described as
private placement
direct placement debt tends to have more restrictive covenants than
publicly issued debt
the securities and exchange commission
reviews registration statements to ensure they comply with current laws and regulations
Alberto currently owns 2500 shares of souther tools. he has just been notified that the company is issuing additional shares and he is being given a chance to purchase some of these shares prior to the shares being offered to the general public. what is this type of an offer called
rights offer
what is a seasoned equity offering
sale of newly issued equity shares by a publicly owned company
who earned the highest risk premium over the period 1926-2016?
small company stocks
advertisements in financial newspaper announcing a public offering of securities, along with a lost of the investment banks handling the offering, are called:
tombstones
executive tours has decided to go public and has hired an investment firm to handle the offering. the investment firm is serving as an
underwriter
a news flash just appeared that caused about a dozen stocks to suddenly increase in value by 12%. what type of risk does this news flash best represent?
unsystematic
