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1、Chapter 20Issuing Securities to the Public Multiple Choice Questions1.An equity issue sold directly to the public is called:A.a rights offer.B.a general cash offer.C.a restricted placement.D.a fully funded sales.E.a standard call issue.2.An equity issue sold to the firms existing stockholders is cal
2、led:A.a rights offer.B.a general cash offer.C.a private placement.D.an underpriced issue.E.an investment bankers issue.3.Managements first step in any issue of securities to the public is:A.to file a registration form with the SEC.B.to distribute copies of the preliminary prospectus.C.to distribute
3、copies of the final prospectus.D.to obtain approval from the board of directors.E.to prepare the tombstone advertisement.4.A rights offering is:A.the issuing of options on shares to the general public to acquire stock.B.the issuing of an option directly to the existing shareholders to acquire stock.
4、C.the issuing of proxies which are used by shareholders to exercise their voting rights.D.strictly a public market claim on the company which can be traded on an exchange.E.the awarding of special perquisites to management.5.Companies use tombstone advertisements in the financial press to:A.announce
5、 the death of the company.B.announce the failure of a financial strategy.C.announce the availability of a new issue of a corporate security.D.notify the public of foreclosure.E.None of the above.6.The first public equity issue made by a company is a(n):A.initial private offering.B.initial public off
6、ering.C.secondary offering.D.seasoned new issue.E.None of the above.7.The first public equity issue that is made by a company is referred to as:A.a rights issue.B.a general cash offer.C.an initial public offering.D.an unseasoned issue.E.Both C and D.8.A new public equity issue from a company with eq
7、uity previously outstanding is called a(n):A.initial public offering.B.seasoned equity issue.C.unseasoned equity issue.D.private placement.E.syndicate.9.The green shoe option is used to:A.cover oversubscription.B.cover excess demand.C.provide additional reward to the investment bankers for a risky i
8、ssue.D.provide additional reward to the issuing firm for a risky issue.E.Both A and B.10.Dilution refers to:A.the increase in stock value due to wider ownership of stock.B.the loss in existing shareholders equity.C.the loss in new shareholders equity.D.the loss in all shareholders equity, both exist
9、ing shareholders and new shareholders.E.None of the above.11.During the SEC waiting period the potential issuing company can issue a preliminary prospectus which contains:A.exactly the same information as the final prospectus except an indication of SEC approval.B.all the information as the final pr
10、ospectus including red writing stating it is a red herring.C.very limited financial information and red writing stating it is preliminary.D.only a description of what the funds are to be used for.E.information very similar to the final prospectus without a price nor with SEC approval.12.A company mu
11、st file a registration statement with the SEC providing various financial and company history information. The registration statement does not need to be filed if:A.the issue is less than $50 million.B.the loan matures within 9 months.C.the issue is less than $5.0 million.D.Both A and B.E.Both B and
12、 C.13.Regulation A security issues are exempt from full SEC registration filing and use only a brief offering statement if:A.the issue is for less than $5,000,000.B.insiders sell no more than $1,500,000 of stock.C.insiders sell no more than 100,000,000 shares.D.Both A and C.E.Both A and B.14.Potenti
13、al investors learn of the information concerning the firm and its new issue from the:A.pre-underwriting negotiating meeting.B.red herring.C.letter of commitment.D.emails from their former finance professor.E.rights offering.15.A registration statement is effective on the 20th day after filing unless
14、:A.the SEC is backlogged with statements.B.a tombstone ad is issued indicating its demise.C.a letter of comment suggesting changes is issued by the SEC.D.a syndicate can be formed sooner.E.None of the above.16.Investment banks perform which of the following services for corporate issuers:A.formulati
15、ng the method used to issue the securities.B.pricing the new securities.C.selling the new securities.D.All of the above.E.None of the above.17.A group of investment bankers who pool their efforts to underwrite a security are known as a(n):A.amalgamate.B.conglomerate.C.green shoe group.D.klatch.E.syndicate.18.A firm commitment arrangement with an investment banker occurs when:A.the syndicate is in
