FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 15: Raising Capital

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 21

Multiple Choice

Review LaterAdd Note

Review Later

Which one of the following is an intended result of a lockup agreement?

A) Temporary support of the market price of IPO shares
B) Maximization of the return to a firm's original owners from an initial spike in the market price of IPO shares
C) Increase in the volume of trading for shares of a recent IPO
D) Limitation on the price volatility of recent IPO shares caused by day trading
E) Guarantee of a minimum number of sold shares for an IPO

F) A) and D)
G) C) and D)

Correct Answer

verified

Show Answer

Question 22

Multiple Choice

Review LaterAdd Note

Review Later

Gwen placed an order with her broker to purchase 1,500 shares of each of three IPOs that are being released this month.Each IPO has an offer price of $22 per share.The number of shares allocated to her along with the closing stock price at the end of the first day of trading for each stock, are as follows: What is her total profit or loss on these three stocks as of the end of the first day of trading for each stock?

A) $1,945
B) $4,500
C) $5,145
D) $3,220
E) $2,450

F) A) and E)
G) B) and C)

Correct Answer

verified

Show Answer

Question 23

Multiple Choice

Review LaterAdd Note

Which statement is correct?

Marti's BBQ is offering 5,000 shares of stock to the general public on a cash basis.Which one of the following terms best applies to this offer?

The Art Works needs to raise $6.2 million for a new facility.Assuming they issue new equity shares via a general cash offering, they expect to incur administrative costs of $412,000 in addition to the underwriting spread of 7.8 percent.If the offer price turns out to be $16 a share, how many shares need to be sold to finance the new facility?

Salem Pet Supply would like to sell 1,400 shares of stock using the Dutch auction method.The bids received are as follows: Bidder C will receive _____ shares and pay a price per share of _____.

Which one of the following best describes a private placement?

An initial public offering refers to:

Which one of the following correctly states a qualification an issuer must meet to be qualified to use Rule 415 for shelf registration?

The Green Shoe option is most apt to be exercised when an IPO is ______ and _____.

Shelf registration:

Florida Farms recently offered 12,000 shares of stock for sale but received payment for only 10,500 shares since that was all the shares the underwriters could sell.What type of underwriting was this?

Which statement is correct?

Phil and Terry started a new business three years ago.Two years ago, they incorporated the business and issued themselves each 20,000 shares of stock.Last year, they took the company public in an IPO and issued an additional 100,000 shares of stock at that time.The offer price was $14 a share, the spread was 8 percent, and the lockup period was six months.The stock closed at $17 a share at the end of the first day of trading.During the first six months of trading, the stock had a price range of $13 to $23 per share.During the second six months of trading, the stock sold between $15 and $21 per share.Both Tracie and Amy purchased 100 shares at the offer price.Given this, which one of the following statements is correct? Ignore trading costs and taxes.

Currently, you own 1.2 percent of the outstanding shares of Home Security.The firm has decided to issue additional shares of stock and has given you the first option to purchase 1.2 percent of those additional shares.What type of offer is this?

Dingo Farms wants to raise $10 million to purchase equipment by issuing new securities.Management estimates the issue will cost the firm $625,500 for accounting, legal, and other costs.The underwriting spread is 8 percent and the issue price is $20 per share.How many shares of stock must be sold if the firm is to have sufficient funds remaining after costs to purchase all of the desired equipment?

Free Trade Partners needs to raise $24.2million to expand its operations into South America.The company will sell new shares of common stock using a general cash offering.The underwriters will charge a spread of 7.6 percent, the administrative costs will be $631,000, and the offer price will be $32 per share.How many shares of stock must be sold if the firm is to raise the funds it desires?

Which one of the following is an aftermarket function performed by the underwriters of a securities issue?

A new issue of common stock offered to the general public by a firm that is currently publicly held is called a(n) :

Wendy placed an order with her broker to purchase 500 shares of each of three IPOs that are being released this month.Each IPO has an offer price of $23 a share.The number of shares allocated to Wendy, along with the closing stock price at the end of the first day of trading for each stock, are as follows: What is her total profit or loss on these three stocks as of the end of the first day of trading for each stock?