University of Phoenix » Finance » Finance 571 - Corporate Finance » Spring 2022 » Wk 2 Practice Ch. 15, How Corporations Raise Capital

Finance 571 - Corporate Finance » Spring 2022 » Wk 2 Practice Ch. 15, How Corporations Raise Capital

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Question #1

The difference between the price at which an underwriter sells the shares and the price paid by the underwriter for those shares is known as the underwriter's _____ .

A. option

B. spread

C. bond

D. equity

Question #2

An underwriter unwilling to take on the risk of firm commitment underwriting may issue an IPO on a _________ basis.

A. spread

B. best efforts

C. options

D. guaranteed

Question #3

The two rules of success in venture capital management are __________, and ___________.

A. identify losers early and cut your losses, be willing to stay with a company until the end

B. only invest in companies with a high probability of success, be willing to stay with a company until the end

C. identify losers early and cut your losses, be willing to take a big risk, but only for a potential big reward

D. only invest in companies with a high probability of success, be willing to take a big risk, but only for a potential big reward

Question #4

Firms looking to raise funds will file registration statements with the ______.

A. Securities and Exchange Commission (SEC)

B. Public Company Accounting Oversight Board (PCAOB)

C. Federal Reserve Board (FED)

D. Office of the Comptroller of the Currency (OCC)

Question #5

Equity investment in high-risk, high-tech start-up private companies is called ______.

A. initial public offering

B. mezzanine financing

C. venture capital

D. seasoned equity offering

Question #6

Underwriters are compensated for the risk of issuing an IPO in the form of a(n) _________.

A. option

B. bond

C. spread

D. equity

Question #7

The type of underwriting used for risky issues of stock that may not sell out completely is called _________ underwriting.

A. firm commitment

B. best efforts

C. risk managed

D. risk averse

Question #8

Statistically, the number of firms that provide venture capitalists with the large payoff they require is approximately _______.

A. 3 in 10

B. 1 in 10

C. 2 in 10

D. 5 in 10

Question #9

A document required by the SEC for new public issues, which contains the issuing firm's financial information, financial history, and details of the existing business, is known as the ___.

A. registration statement

B. balance sheet

C. tombstone

D. financial statement

Question #10

Providers of venture capital are ______.

A. pension funds, the Federal Reserve Bank and savings banks

B. specialist venture capital firms and savings banks

C. the Federal Reserve Bank and savings banks

D. wealthy individuals, mature corporations looking for new technology, pension funds, and specialist venture capital firms

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