FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 15: Venture Capital, IPOs, and Seasoned Offerings

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 21

Essay

Review LaterAdd Note

Review Later

Why is it likely that venture capital is disbursed in installments,rather than issuing all necessary funds at once?

Correct Answer

verified

Venture capitalists are unlikely to issu...

View Answer

Show Answer

Question 22

Multiple Choice

Review LaterAdd Note

Review Later

Currently,M & S Inc.has 2 million shares outstanding selling at $70 a share.A rights issue will be made that allows 1 share to be purchased for every 5 shares currently held by stockholders for $40 each.Which of the following is true?

A) the number of shares outstanding will fall to 1.6 million.
B) the firm will raise $13.33 million.
C) the stock price will fall to $65.
D) the total value of the firm will equal $124 million.

E) None of the above
F) B) and C)

Correct Answer

verified

Show Answer

Question 23

Multiple Choice

Review LaterAdd Note

The allowance of POP registration in Canada is likely to have increased:

Private placement contracts may be custom tailored for each individual investor.

If the announcement of a new equity offering causes current equity values to drop,then signaling theory would predict that:

Second-stage financing occurs:

What is a security?

What would you expect to be the market price of stock after a sold-out rights issue if each existing shareholder purchases one new share at $60 for each three that they currently hold and the current share price is $100?

What is a shelf registration? Why would a public firm want to issue securities using a shelf registration?

Midlands marketing research cost is $300 million.The firm issues an additional $50 million of stock,but as a result the stock price falls by 2%.What is the cost of the price drop to existing shareholders as a fraction of the funds raised?

Stock that is sold through a rights issue:

Stanfield Inc.needs to raise $12.5 million in capital.The company's investment bankers recommend an offer price (or gross proceeds)of $15 per share; and Stanfield will receive $14 per share.How many shares of stock will Don's need to sell in order to receive the $12.5 million they need? Calculate the underwriter's spread on the issue.

A general cash offer is necessary when issuing a private placement.

A private placement avoids which of the following costs?

When securities are issued under a firm commitment,the underwriter bears the risk of low sales.

Assume the issuer incurs $1 million in other expenses to sell 3 million shares at $40 each to an underwriter and the underwriter sells the shares at $43 each.By the end of the first day's trading,the issuing company's stock price had risen to $70.What is the total cost (direct expenses plus underpricing cost) ?

POP System allows for:

When underwriters are unsure of the demand for a new offering,they:

What percentage of direct expense is required to market stock if the issuer incurs $1 million in other expenses to sell 3 million shares at $34 each to an underwriter and the underwriter sells the shares at $40 each?

Typical firms that engage in private placements usually have a low degree of risk.