Finance 301 Ch. 15 Final Questions

Miller and Chase is offering $4 million of new securities to the general public. Which SEC regulation governs this offering? a. Regulation A b. Regulation C c. Regulation G d. Regulation Q e. Regulation R

a

Which one of the following is a preliminary prospectus? a. Tombstone b. Green shoe c. Registration statement d. Rights offer e. Redherring

e

If an IPO is underpriced then the a. Investors in the IPO are generally unhappy with the underwriters b. Issue is less likely to sell out c. Stock price will generally decline on the first day of trading d. Issuing firm is guaranteed to be successful in the long term e. Issuing firm receives less money than it probably should have

b

Direct business loans typically ranging from one to five years are called: a. Private placements b. Debt SEOs c. Notes payable d. Debt IPOs e. Term loans

e

Soup galore is a partnership that was formed three years ago for the purpose of creating, producing, and distributing healthy soups in a dried form. The firm has been extremely successful thus far and has decided to incorporate and offer shares of stock into the general public. What is this type of an equity offering called? a. Venture capital b. Shelf offering c. Private placement d. Seasoned equity offering e. Initial public offering

e

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 a. Gross spread b. Under price amount c. Filing fee d. New issue premium d. Offer price

a

Jones & Co. is funded by a group of individual investors for the sole purpose of providing funding for individuals who are trying to convert their new ideas into viable products. What is this type of funding called? a. Green shoe funding b. Tombstone underwriting c. Venture capital d. Red herring funding e. Life cycle capital

c

What is an issue of securities that is offered for sale to the general public on direct cash basis called? a. Best efforts underwriting b. Firm commitment underwriting c. General cash offer d. Rights offer e. Herring offer

c

The Securities and Exchange Commission a. Verifies the accuracy of the information contained in the prospectus b. Verifies the accuracy of the information contained in the red herring c. Examines the registration statement during the Green Shoe period d. Is concerned only that an issue complies with all rules and regulations e. Determines the final offer price once they have approved the registration statement

d

The value of a right depends upon: I. the number of rights required to purchase one new share II. the market price of the security III. the subscription price IV. the price-earnings ratio of the stock A. II and III only B. II and IV only C. I and II only D. I, II, and III only E. I, II, III, and IV

d

When a firm announces an upcoming seasoned stock offering, the market price of the firm's existing shares tend to a. Increase b. Decrease c. Remain constant d. Respond but the direction of the response is not predictable as shown by past studies e. Decrease momentarily and then immediately increase substantially within an hour following the announcement

b

Which one of the following statements concerning venture capitalists is correct? a. Venture capitalists assume management responsibility for the firms they finance b. Exit strategy is a key consideration when selecting a venture capitalist c. Venture capitalists limit their services to providing money to start-up firms d. Most venture capitalists are long-term investors in a firm e. A venture capitalist normally invests in a new idea and finances that idea until the newly formed firm can issue an IPO

b

What is a prospectus? a. A letter issued by the SEC authorizing a new issue of securities b. A report stating that the SEC recommends a new security to investors c. A letter issued by the SEC that outlines the changes required for a registration statement to be approved d. A document that describes the details of a proposed security offering along with relevant information about the issuer

d

Which one of the following is probably the most successful means of finding venture capital? a. Internet searches b. Dutch actions c. Newspaper advertisements d. Personal contacts e. Personal letters to venture capital firms

d

What is the definition of a syndicate a. A venture capitalist b. A group of attorneys providing services for an IPO c. Block of investors who control a firm d. A bank that loans funds to finance the startup of a new firm e. A group of underwriters sharing the risk of selling a new issue of securities

e

What is the form called that is filed with the SEC and discloses the material information on the securities issuer when that issuer offers new securities to the general public? a. Prospectus b. Red herring c. Indenture d. Public disclosure statement e. Registration statement

e