Chapter 15 Quiz, How Corporations Issue Securities
1.
The market for venture capital refers to the:
A.
Private financial marketplace for providing equity investment for small, startup firms
B.
Bond market
C.
Market for providing equity to well-established firms
D.
All of the above
2.
Registration statements are filed with the:
A.
Federal Reserve Board (FED)
B.
Federal Reserve Bank (FRB)
C.
Securities and Exchange Commission (SEC)
D.
Environmental Protection Agency (EPA)
E.
Federal Bureau of Investigation (FBI)
3.
Generally, underwriters provide the following services to the issuing firm:
A.
Provide advice
B.
Buy new issue
C.
Reselling the issue to the public
D.
All of the above
4.
A group of investment bankers who pool their efforts to underwrite a large issue of a security is known as:
A.
A syndicate
B.
A private placement
C.
A tombstone group
D.
An underwriter's group
5.
Generally initial public offerings (IPOs) are:
A.
Overpriced
B.
Correctly priced
C.
Underpriced
6.
A security issue sold directly to the public is called:
A.
A rights offer
B.
A general cash offer
C.
A private placement
D.
An uniform-price auction
7.
SEC Rule 415 refers to:
A.
The issuance of securities to qualified institutional investors
B.
Blue-sky laws
C.
The provision which allows large companies to file a single registration statement covering financing plans up to two years, also known as shelf registration
D.
None of the above
8.
A security issued in the United States that represents shares of stock in a foreign company is called:
A.
American Depositing Receipts (ADRs)
B.
Euros
C.
A bought deal
D.
None of the above
9.
When a company sells an entire issue of securities to a small group of institutional investors like life insurance companies, pension funds etc., it is called
A.
A rights offering
B.
A general art offering
C.
A private placement
D.
An unseasoned issue
10.
SEC registration is required when a company makes
A.
A public offering of securities issue of value greater than $5 million
B.
A private placement of securities
C.
Both a and b
D.
A public offering of securities issue of value less than $5 million and maturities less than 9 months
11.
A rights issue is also called:
A.
A private placement
B.
Shelf registration
C.
Initial public offering (IPO)
D.
A privileged subscription
12.
Klear Sky Corporation has 1,000,000 shares outstanding. It wishes to issue #250,000 new shares using rights issue. How many rights are needed to buy one new share?
A.
1 right/share
B.
2 rights/share
C.
3 rights/share
D.
4 rights/share
13.
Assuming everything else remains the same, when a stock goes ex-rights its price should:
A.
Increase
B.
Decrease
C.
Remain the same
D.
Impossible to predict
14.
Underpricing is not a serious problem for most initial public offerings (IPOs)
A.
True
B.
False
15.
Shelf registration allows the firm to file a registration statement with the SEC to cover a series of subsequent issues.
A.
True
B.
False
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