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MultipleChoiceQuestions1.Abusinessplangenerallycontains:I)adescriptionoftheproposedproducts;II)adescriptionofthepotentialmarket;III)adescriptionoftheunderlyingtechnology;IV)adescriptionofresourcesneededA.IonlyB.IandIIonlyC.IIandIIIonlyD.I,II,III,andIVType:Easy7.Wealthyindividualswhoprovideequityinvestmentfornewfirmsarecalled:I)whiteknights;II)redherrings;III)angelinvestorsA.IonlyB.IandIIonlyC.IIIonlyD.IIonlyType:EasyType:MediumType:Easy10.LargetechnologyfirmslikeIntel,JohnsonandJohnson,andSunMicrosystemsthatprovideequitycapitaltonewinnovativecompaniesarecalled:A.angelinvestors.B.corporateventurers.C.whiteknights.D.mezzaninefinanciers.Type:Medium11.Thestockexchangethatspecializesintradingthesharesofyoungandrapidlygrowingcompaniesis:A.Nasdaq.B.NYSE.C.LondonStockExchange.D.TokyoStockExchange.Type:MediumType:Medium13.Firmslookingtoraisefundswillfileregistrationstatementswiththe:A.FederalReserveBoard(FED).B.OfficeoftheComptrolleroftheCurrency(OCC).C.SecuritiesandExchangeCommission(SEC).D.PublicCompanyAccountingOversightBoard(PCAOB).Type:EasyType:Medium16.Generally,underwritersprovidethefollowingservicestotheissuingfirm:I)provideadvice;II)buysomeorallofthenewissue;III)reselltheissuetothepublicA.IonlyB.IandIIonlyC.IandIIIonlyD.I,II,andIIIType:Easy17.Statelawsthatregulatesalesofsecuritieswithinthestatearecalled:A.redherrings.B.registrationlaws.C.Rule415regulations.D.blue-skylaws.Type:MediumType:Difficult19.Underwriterswillhandleanissueofnewsecuritiesona:I)besteffortsbasis;II)firmcommitmentbasis;III)allornonebasisA.IonlyB.IIonlyC.IIIonlyD.IorIIorIIIType:Easy20.Underwritersaretypicallycompensatedfortheirservicesinhelpingafirmissuenewsecuritiesintheformofa:A.commission.B.setfee.C.spread.D.finder'sfee.Type:Easy21.Generally,initialpublicofferings(IPOs)are:A.overpriced.B.correctlypriced.C.underpriced.D.thereisnogeneraltrend.Type:Easy22.TheaverageinitialreturnsfrominvestinginIPOsisthehighestin:A.Denmark.B.China.C.Italy.D.Mexico.Type:Easy25.Supposethatagovernmentwishestoauction5millionbonds(quantity),andthreepotentialbuyerssubmitthefollowingbids:Inadiscriminatoryauction:A.BuyerApays$1,015andBuyerBpays$1,000.B.BuyerApays$1,000andBuyerBpays$1,000.C.BuyerApays$990andBuyerBpays$990.D.BuyerApays$1,000andBuyerCPays$990.Type:Difficult29.Ageneralcashofferinvolvesthefollowingprocesses:I)registertheissuewiththeSEC;II)sellthesecuritiesthroughanunderwriterorasyndicateofunderwriters;III)haveunderwriterbuildupabookoflikelydemandforthesecurities;IV)priceoftheissueisfixed;V)sellthesecuritiestothepublicA.I,II,andIIIonlyB.I,II,andIVonlyC.I,II,III,IV,andVD.II,III,IV,andVonlyType:Medium30.Whichofthefollowingstatementsbestdescribesshelfregistration?A.Theissuanceofsecuritiestoqualifiedinstitutionalinvestors.B.Theenforcementofblue-skylaws.C.Theprovisionthatallowslargecompaniestofileasingleregistrationstatementcoveringfinancingplansuptothreeyearsintothefuture.D.Registrationofthesaleofsecuritiesintheprimarymarket.Type:Medium32.Thefollowingareadvantagesofshelfregistrationexcept:I)securitiescanbeissuedindribsanddrabswithoutincurringexcessivetransactioncosts;II)securitiescanbeissuedonshortnotice;III)securityissuescanbetimedtotakeadvantageofmarketconditionsA.IonlyB.IIonlyC.IIIonlyD.I,II,andIIIType:Medium36.Generally,whichofthefollowingissueshavethelowesttotaldirectcostsofissuingasapercentageofgrossproceeds?A.initialpublicofferings(IPOs)B.seasonedequityofferings(SEOs)C.convertiblebondsD.straightbondsType:Easy39.ImageStorageCorporationhas1,000,000sharesoutstanding.Itwishestoissue500,000newsharesusinga(NorthAmerican)rightsissue.Ifthecurrentstockpriceis$50andthesubscriptionpriceis$47/share,whatisthevalueofaright?A.$0.40/rightB.$5.00/rightC.$2.50/rightD.$1.00/rightStockpriceafterissue=($50M+0.5×47)/1.5M=$49.Shareholderswereofferedonerightpershareofstock.Valueoftworights=(49-47)=$2.Valueof1right=$1.00Type:Medium40.NewImageCorporationhas1,000,000sharesoutstanding.Itwishestoissue500,000newsharesusingrightsissue.Howmany(NorthAmerican)rightsareneededtobuyonenewshare?A.1right/shareB.2rights/shareC.3rights/shareD.4rights/shareNumberofrightsrequired=1,000,000/500,000=2.Type:Easy41.Ifashareholderoraninvestorwantstoacquireanewshareofstockunderarightsissue,he/shemust:A.buycalloptionsonthestock.B.acquiretheappropriatenumberofrightspershareandsubscriptionpricepershareandsubmitthemtothesubscriptionagent.C.acquirethecorrectnumberofrightspershareandsubmitthemtothesubscriptionagent.D.registerhisorderwiththeNYSE.Type:Medium42.Whichofthefollowingisapossibleexceptiontotheefficient-markettheory?A.UnderwriterschargeinvestorsmoreforIPOsharesthantheypaytheissuingfirms.B.IPOspreadsareloweronlargerissues.C.Theissuanceofequityisinterpretedasanunfavorablesignalbyinvestors.D.Thelong-runreturnsofIPOstendtounderperformthemarket.Type:MediumType:DifficultType:MediumType:Medium47.Whattermmightbeusedtodescribeanunderwriterwhoinfluencesananalystinthesamefirmtomodifyareportsoastocreateafavorableimpressionofasecuritiesissue?A.SOXcomplianceB.spinningC.conflictofinterestD.ChinesewallType:Medium4