The firm’s initial ratio of current assets to total assets is ________. (See Table 14.2) A) 3:1 B) 1:3 C) 2:1 D) 2:3 ANSWER B
Date: September 19th, 2020
In undertaking a seasoned equity offering (SEO), why do firms almost always hire an underwriter via negotiation rather than competitive bidding? a. The SEC mandates negotiation for SEOs (except in rare cases). b. The selling process can be problematic because of informational asymmetry problems. c. Negotiation actually results in a lower underwriter spread. […]
Date: September 19th, 2020
An decrease in the current liabilities to total assets ratio will result in ________. A) an increase in risk B) an increase in profit C) a decrease in risk D) a decrease in profit ANSWER C
Date: September 19th, 2020
What is a unit IPO? a. An IPO of a previous unit (or division) of a firm that is being spun off of its parent. b. A package that includes both common stock and warrants. c. An IPO of common shares that is sold in bulk (i.e., as a unit) to a single investor. […]
Date: September 19th, 2020
What types of firms are most likely to go public via a unit IPO? a. larger, older, more established firms b. smaller, younger, more speculative firms ANSWER B
Date: September 19th, 2020
Certain financing plans are termed conservative when ________. A) short-term financing is used frequently B) working capital is relatively high C) current assets are relatively low D) risk is increased ANSWER B
Date: September 19th, 2020
The firm’s annual financing costs of the aggressive financing strategy are ________. (See Table 14.1) A) $21,175 B) $26,075 C) $24,475 D) $22,775 ANSWER B
Date: September 19th, 2020
An important aspect of insiders’ commitment to continuing ownership is the , whereby insiders agree to hold their shares for a period (typically 180 days) after the IPO date. a. ownership commitment b. signaling agreement c. statue quo agreement d. lockup provision ANSWER D
Date: September 19th, 2020
The firm’s annual financing costs of conservative financing strategy are ________. (See Table 14.1) A) $22,775 B) $26,075 C) $26,775 D) $21,175 ANSWER C
Date: September 19th, 2020
An IPO firm has a choice of two methods of selling shares. In the (i) method, the underwriter essentially acts as a (ii), agreeing to purchase all shares offered at a fixed price, and then takes the risk of reselling the shares to the public. In the (iii) method, the underwriter essentially acts as a […]
Date: September 19th, 2020
