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