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18-80
98. One of the reasons that so much commercial paper is outstanding is because:
99. The rate on commercial paper is generally higher than the prime rate. True or false?
100. Which of the following statements is incorrect?
101. Which of the following statements is incorrect?
102. Which of the following statements is correct?
103. Which of the following statements is correct?
104. What is the difference between a prospectus and a red herring prospectus?
105. When stock market values are relatively high:
106. A professionally managed pool of money used to finance new and often high-risk firms is
referred to as:
107. A lead bank in a syndicate, which directly negotiates with the issuing firm on behalf of the
syndicate, is referred to as the:
108. Sipe's Paint and Wallpaper, Inc., needs to raise $1.05 million to finance plant expansion.
In discussions with its investment bank, Sipe's Paint and Wallpaper learns that the bankers
recommend a gross price of $22 per share and that 50,000 shares of stock be sold. If the net
proceeds on the stock sale leave Sipe's Paint and Wallpaper with $1.05 million, what percent of
the stock price does the underwriter's spread represent?
109. Sipe's Paint and Wallpaper, Inc., needs to raise $1 million to finance plant expansion. In
discussions with its investment bank, Sipe's Paint and Wallpaper learns that the bankers
recommend a gross price of $40 per share and that 30,000 shares of stock be sold. If the net
proceeds on the stock sale leave Sipe's Paint and Wallpaper with $1 million, what percent of the
stock price does the underwriter's spread represent?
110. Sipe's Paint and Wallpaper, Inc., needs to raise $1 million to finance plant expansion. In
discussions with its investment bank, Sipe's Paint and Wallpaper learns that the bankers
recommend a gross price of $40 per share and that 30,000 shares of stock be sold. If the net
proceeds on the stock sale leave Sipe's Paint and Wallpaper with $1 million, what percent of the
total raised represents net proceeds to the firm?
111. Sipe's Paint and Wallpaper, Inc., needs to raise $1.19 million to finance plant expansion.
In discussions with its investment bank, Sipe's Paint and Wallpaper learns that the bankers
recommend a gross price of $42 per share and that 33,000 shares of stock be sold. If the net
proceeds on the stock sale leave Sipe's Paint and Wallpaper with $1.19 million, what percent of
the total raised represents net proceeds to the firm?
112. A market in which corporations raise funds through new issues of securities is referred to
as a:
113. A "thin" market is characterized by:
114. List the steps for getting shares of stock to the investing public.
1. Decide to issue
2. Registration statement sent to SEC
3. Red herring prospectus sent to prospective buyers
4. SEC requests changes or additional information
5. Official prospectus issued
6. Shares offered to public
115. What information is included in the registration statement filed with the SEC for getting
shares of stock to the investing public?
116. How does a best effort underwriting differ from a firm commitment underwriting?
117. How does a competitive sale of securities differ from a negotiated sale?
118. As a new or small firm considers going public, what must the owners consider?
119. Explain the different methods for small firms to get funding.
120. Explain what venture capital is and how it encourages entrepreneurship.
121. Differentiate among sources of capital funding for public firms.
122. Explain the process by which securities are underwritten.
123. Contrast best efforts underwriting and firm commitment underwriting.
