BUSI 530 - part 3
Select all that apply
Providers of venture capital are:
Multiple select question.
savings banks
wealthy individuals
the Federal Reserve Bank
mature corporations looking for new technology
pension funds
specialist venture capital firms ------- ✔ CORRECT ANSWER ✓✓wealthy individuals
mature corporations looking for new technology
pension funds
specialist venture capital firms
Statistically, the number of firms that provide venture capitalists with the large payoff they
require is approximately _______. ------- ✔ CORRECT ANSWER ✓✓1 in 10
The first public equity issue made by a firm is called a(n) ___. ------- ✔ CORRECT ANSWER
✓✓initial public offering
The three roles usually played by underwriters for their client companies are _______,
________ and ________. ------- ✔ CORRECT ANSWER ✓✓adviser; stock buyer; stock reseller
True or false: the advantage of the bookbuilding method is that it allows underwriters to
reward investors whose bids are most helpful in setting the issue price. ------- ✔ CORRECT
ANSWER ✓✓True
,Equity investment in high-risk, high-tech start-up private companies is called: ------- ✔ CORRECT
ANSWER ✓✓venture capital
Select all that apply
Which of the following are three of the banks that dominate the underwriting industry in the
United States? ------- ✔ CORRECT ANSWER ✓✓Morgan Stanley
Bank of America Merrill Lynch
Goldman Sachs
Select all that apply
The two rules of success in venture capital management are __________, and ___________. ----
--- ✔ CORRECT ANSWER ✓✓identify losers early and cut your losses
be willing to take a big risk, but only for a potential big reward
An equity issue that makes a privately owned firm public is called a(n): ------- ✔ CORRECT
ANSWER ✓✓initial public offering
The group of underwriters that is assembled to sell a very large issue of stock is referred to as a
________. ------- ✔ CORRECT ANSWER ✓✓syndicate
Which of the following statements describes a seasoned offering? ------- ✔ CORRECT ANSWER
✓✓It is the sale of additional securities by a firm that is already publicly traded.
The most common method used in the U.S. to determine demand for and price of a stock in an
IPO is called the ________ method. ------- ✔ CORRECT ANSWER ✓✓bookbuilding
, Which of the following statements best describes shelf registration? ------- ✔ CORRECT ANSWER
✓✓The provision that allows large companies to file a single registration statement covering
financing plans for up to 3 years.
In the U.S., underwriting of securities issues is dominated by ________. ------- ✔ CORRECT
ANSWER ✓✓major investment banks
True or false: flotation costs are higher for issuing equity than for issuing debt. ------- ✔
CORRECT ANSWER ✓✓True
Stock prices decline at the announcement of a new issue because investors believe that
managers are signaling that the stock price is currently __________. ------- ✔ CORRECT ANSWER
✓✓overpriced
The main motivation for a firm to undertake an IPO is that _________. ------- ✔ CORRECT
ANSWER ✓✓they have grown to need more capital than individuals or venture capitalists can
provide
Any additional issue of stock by a company that is already publicly traded is called a
__________. ------- ✔ CORRECT ANSWER ✓✓seasoned offering
Shelf registration is more often used for the: ------- ✔ CORRECT ANSWER ✓✓issue of corporate
bonds
Select all that apply
The issue costs are higher for equity than for debt securities for which of the following reasons?
------- ✔ CORRECT ANSWER ✓✓Extra Administrative Costs
Underwriters demand extra compensation for bearing greater risk
Select all that apply
Providers of venture capital are:
Multiple select question.
savings banks
wealthy individuals
the Federal Reserve Bank
mature corporations looking for new technology
pension funds
specialist venture capital firms ------- ✔ CORRECT ANSWER ✓✓wealthy individuals
mature corporations looking for new technology
pension funds
specialist venture capital firms
Statistically, the number of firms that provide venture capitalists with the large payoff they
require is approximately _______. ------- ✔ CORRECT ANSWER ✓✓1 in 10
The first public equity issue made by a firm is called a(n) ___. ------- ✔ CORRECT ANSWER
✓✓initial public offering
The three roles usually played by underwriters for their client companies are _______,
________ and ________. ------- ✔ CORRECT ANSWER ✓✓adviser; stock buyer; stock reseller
True or false: the advantage of the bookbuilding method is that it allows underwriters to
reward investors whose bids are most helpful in setting the issue price. ------- ✔ CORRECT
ANSWER ✓✓True
,Equity investment in high-risk, high-tech start-up private companies is called: ------- ✔ CORRECT
ANSWER ✓✓venture capital
Select all that apply
Which of the following are three of the banks that dominate the underwriting industry in the
United States? ------- ✔ CORRECT ANSWER ✓✓Morgan Stanley
Bank of America Merrill Lynch
Goldman Sachs
Select all that apply
The two rules of success in venture capital management are __________, and ___________. ----
--- ✔ CORRECT ANSWER ✓✓identify losers early and cut your losses
be willing to take a big risk, but only for a potential big reward
An equity issue that makes a privately owned firm public is called a(n): ------- ✔ CORRECT
ANSWER ✓✓initial public offering
The group of underwriters that is assembled to sell a very large issue of stock is referred to as a
________. ------- ✔ CORRECT ANSWER ✓✓syndicate
Which of the following statements describes a seasoned offering? ------- ✔ CORRECT ANSWER
✓✓It is the sale of additional securities by a firm that is already publicly traded.
The most common method used in the U.S. to determine demand for and price of a stock in an
IPO is called the ________ method. ------- ✔ CORRECT ANSWER ✓✓bookbuilding
, Which of the following statements best describes shelf registration? ------- ✔ CORRECT ANSWER
✓✓The provision that allows large companies to file a single registration statement covering
financing plans for up to 3 years.
In the U.S., underwriting of securities issues is dominated by ________. ------- ✔ CORRECT
ANSWER ✓✓major investment banks
True or false: flotation costs are higher for issuing equity than for issuing debt. ------- ✔
CORRECT ANSWER ✓✓True
Stock prices decline at the announcement of a new issue because investors believe that
managers are signaling that the stock price is currently __________. ------- ✔ CORRECT ANSWER
✓✓overpriced
The main motivation for a firm to undertake an IPO is that _________. ------- ✔ CORRECT
ANSWER ✓✓they have grown to need more capital than individuals or venture capitalists can
provide
Any additional issue of stock by a company that is already publicly traded is called a
__________. ------- ✔ CORRECT ANSWER ✓✓seasoned offering
Shelf registration is more often used for the: ------- ✔ CORRECT ANSWER ✓✓issue of corporate
bonds
Select all that apply
The issue costs are higher for equity than for debt securities for which of the following reasons?
------- ✔ CORRECT ANSWER ✓✓Extra Administrative Costs
Underwriters demand extra compensation for bearing greater risk
