Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Chapter 15
Raising Capital
Multiple Choice Questions
1.
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?
2.
What is the form called that is filed with the SEC and discloses the material information on
a securities issuer when that issuer offers new securities to the general public?
3.
Miller & Chase is offering $4 million of new securities to the general public. Which SEC
regulation governs this offering?
4.
What is a prospectus?
5.
Which one of the following is a preliminary prospectus?
6.
Advertisements in a financial newspaper announcing a public offering of securities, along
with a list of the investment banks handling the offering, are called:
7.
What is an issue of securities that is offered for sale to the general public on a direct cash
basis called?
8.
Tony currently owns 12,000 shares of GL Tools. He has just been notified that the firm is
issuing additional shares of stock and that 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?
9.
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 to the general
public. What is this type of an equity offering called?
10.
What is a seasoned equity offering?
11.
Executive Tours has decided to take its firm public and has hired an investment firm to
handle this offering. The investment firm is serving as a(n):
12.
What is the definition of a syndicate?
13.
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 the:
14.
D.L. Jones & Co. recently went public. The firm received $20.80 a share on the entire offer
of 25,000 shares. Keeser & Co. served as the underwriter and sold 23,700 shares to the
public at an offer price of $22 a share. What type of underwriting was this?
15.
Blue Stone Builders recently offered to sell 45,000 newly issued shares of stock to the
public. The underwriters charged a fee of 8 percent and paid Blue Stone Builders $16.40 a
share on 40,000 shares. Which one of the following terms best describes this
underwriting?
16.
The 40-day period following an IPO during which the SEC places restrictions on the public
communications of the issuer is known as the _____ period.
17.
Denver Liquid Wholesalers recently offered 50,000 new shares of stock for sale. The
underwriters sold a total of 53,000 shares to the public. The additional 3,000 shares were
purchased in accordance with which one of the following?
18.
Shares of PLS United have been selling with rights attached. Tomorrow, the stock will sell
independent of these rights. Which one of the following terms applies to tomorrow in
relation to this stock?
19.
The date on which a shareholder is officially listed as the recipient of stock rights is called
the:
20.
A rights offering in which an underwriting syndicate agrees to purchase the unsubscribed
portion of an issue is called a _____ underwriting.
21.
The amount paid to an underwriter who participates in a standby underwriting agreement
is called a(n):
22.
Franklin Minerals recently had a rights offering of 1,000 shares at an offer price of $10 a
share. Isabelle is a shareholder who exercised her rights option by buying all of the rights
to which she was entitled based on the number of shares she owns. Currently, there are
six shareholders who have opted not to participate in the rights offering. Isabelle would
like to purchase the unsubscribed shares. Which one of the following will allow her to do
so?
23.
Roy owns 200 shares of R.T.F., Inc. He has opted not to participate in the current rights
offering by this firm. As a result, Roy will most likely be subject to:
24.
Direct business loans typically ranging from one to five years are called:
25.
A group of five private investors recently loaned $6 million to Henderson Hardware for ten
years at 9 percent interest. This loan is best described as a:
26.
Pearson Electric recently registered 250,000 shares of stock under SEC Rule 415. The firm
plans to sell 150,000 shares this year and the remaining 100,000 shares next year. What
type of registration was this?
27.
Suzie is a chemist who has been experimenting with fragrances in her home laboratory
and feels that she now has three viable perfumes that could be successfully marketed.
She knows a venture capitalist who has offered to finance her business to the point where
she would be ready to begin the manufacturing and marketing stage. Which type of
financing is Suzie being offered?
