ch 14 and 15 FIN 300 Final

What is a prospectus?

A document that describes the details of a proposed security offering along with relevant information about the issuer

Which one of the following statements is correct concerning the issuance of long-term debt?

Direct placement debt tends to have more restrictive covenants than publicly issued debt.

D1

NEXT YEAR OR NEXT PERIOD

Dutch Auction Underwriting

The type of underwriting in which the offer price is set based on competitive bidding by investors. Also known as a uniform price auction. google was the first

red herring

a preliminary prospectus distributed to prospective investors in a new issue of securities

The raising of small amounts of capital from a large number of people is known as:

crowdfunding.

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`

What is a seasoned equity offering?

Sale of newly issued equity shares by a publicly owned company

Green shoe option

`cost of additional shares that the syndicate can purchase after the issue has gone to market

When a firm announces an upcoming seasoned stock offering, the market price of the firm's existing shares tends to:

decrease

spread

difference between what the syndicate pays the company and what the security sells for initially in the market

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 percent and paid Blue Stone Builders the uniform auction price for each of those shares. Which one of the following terms best describes this underwriting?

dutch action

Jones & Co. recently went public and received $23.07 a share on their entire offer of 30,000 shares. Keeser & 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

obile 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 which one of the following?

green shoe provision

syndicate

group of investment bankers that market securities and share the risk associatioed with selling the issue

A syndicate can best be defined as a:

group of underwriters sharing the risk of selling a new issue of securities.

required return

is the same as the appropriate discount rate and is based on the risk of the cash flows

With firm commitment underwriting, the issuing firm:

knows upfront the amount of money it will receive from the stock offering.

UNDERWRITERS

price securities, sell securities and price stavilization

venture capital

private financing for relatively new bueiness in exchange for equity

bonds

public issue of long term debt

cost of debt

require return on your companys debt

lberto currently owns 2,500 shares of Southern 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

Direct business loans typically ranging from one to five years are called:

term loans

Cost of Equity

the return that equity investors require on their investment in the firm

firm commitment underwriting

the type of underwriting in which the underwriter buys the entire issue, assuming full financial responsibility for any unsold shares

Best Efforts Underwriting

the type of underwriting in which the underwriter sells as much of the issue as possible, but can return any unsold shares to the issuer without financial responsibility company bears the risk

Advertisements in a financial newspaper announcing a public offering of securities, along with a list 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 a(n):

underwriter