Question 3 Firms go public to: a. diversify public debtholders\' risk. b. raise

Question

Question 3 Firms go public to:

a. diversify public debtholders' risk. b. raise additional funds. c. avoid venture capital financing. d. increase their amount of borrowed funds. e. sell the company to outsiders.

Question 4 You own 100 of the 15,000 outstanding shares of Delta Movers stock. The firm just announced that it will be issuing an additional 5,000 shares to the general public in a cash offer at $22 per share. What type of event are you participating in if you decide to purchase 100 of these additional shares?

Select one: a. IPO b. Seasoned equity offering c. Dutch auction d. Rights offer e. Private placement

Question 5 What is the group called who share both the risks and the marketing responsibilities for a securities offering?

Select one: a. Syndicate b. Dutch auction group c. Underwriting cartel d. Firm commitment group e. Venture capitalists

Explanation / Answer

Question 3: Option B is correct.

By going public, a company can issue stocks to public and raise funds from them. It helps in expansion of their business.

Question 4:

Option B is correct

This event is known as seasoned equity offering or secondary issuance. It has already issued stocks, so this is not an IPO. Issuing new stocks is known as seasoned equity offering.

Question 5:

Option C is correct.

Underwriting cartel is a group of company who involves in promotion of stocks of the company going public. These company buy the shares of the issuer if they don’t able to find any buyer. Thus they share both the risks and marketing responsibilities.

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