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