Raising Capital Exercise

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I.DEFINITIONS

VENTURE CAPITAL
a1.The financing provided for start-up, often high-risk, private business enterprises is
called:
a.venture capital.
b.junk bonds.
c.flotation costs.
d.initial public offerings.
e.financial futures.

REGISTRATION STATEMENT
b2.The document(s) filed with the SEC disclosing all material information relating to the
firm making an offering of public securities is called the:
a.offering prospectus.
b.registration statement.
c.red herring filing.
d.indenture contract.
e.SEC Form 13-J.

REGULATION A
c3.The SEC regulation that exempts public issues of less than $5 million from most
registration requirements is called:
a.the Green Shoe Provision.
b.the red herring Provision.
c.Regulation A.
d.Regulation Q.
e.the Open Markets Exemption.

PRELIMINARY PROSPECTUS
d4.The preliminary prospectus distributed to investors during the SEC waiting period is
often called a(n):
a.indenture contract.
b.signature form 10-W.
c.letter of comment.
d.red herring.
e.Green Shoe.

LETTER OF COMMENT
e5.The _____ is transmitted to the prospective issuing firm by the SEC when they have
suggestions for changes to the registration statement and/or its supporting documents.
a.indenture contract
b.Green Shoe statement
c.Regulation A statement
d.preliminary prospectus
e.letter of comment

PROSPECTUS
a6.The legal document describing details of the issuing corporation and its security
offering to potential investors is called the:
a.prospectus.
b.tombstone advertisement.
c.letter of comment.
d.Regulation A statement.
e.rights offering.

TOMBSTONE
b7.Advertisements in, for example, The Wall Street Journal announcing a corporation’s
public offering of securities, along with a list of the investment banks handling the
offering, are called:
a.red herrings.
b.tombstones.
c.Green Shoes.
d.registration statements.
e.letters of comment.

GENERAL CASH OFFER
c8.An issue of securities offered for sale to the general public on a direct cash basis is
called a _____ offering.
a.best efforts
b.firm commitment
c.general cash
d.rights
e.red herring

RIGHTS OFFER
d9.A public offering of securities where existing shareholders of the firm have the first
opportunity to buy the new securities is called a _____ offering.
a.best efforts
b.firm commitment
c.general cash
d.rights
e.red herring

INITIAL PUBLIC OFFERING
e10.A corporation’s first sale of equity made available to the public is called a(n):
a.share repurchase program.
b.shelf registration filing.
c.private placement.
d.seasoned equity offering (SEO).
e.initial public offering (IPO).

SEASONED EQUITY OFFERING
d11.A public offering of equity by a corporation that has previously issued securities to the
public is called a(n):
a.share repurchase program.
b.shelf registration filing.
c.private placement.
d.seasoned equity offering (SEO).
e.initial public offering (IPO).

UNDERWRITERS
c12.The investment bank(s) that act as intermediaries between the company issuing
securities and the investing public are called:
a.privileged intermediaries.
b.venture capitalists.
c.underwriters.
d.standby investors.
e.primary investors.

UNDERWRITING SYNDICATE
b13.A group of underwriters formed to share the risk in marketing and distributing a sale of
securities to the investing public is called a(n):
a.cartel.
b.syndicate.
c.cooperative venture capital system.
d.oligopoly.
e.insider consortium.

UNDERWRITING SPREAD
a14.The difference between the underwriters’ buying price and the offering price of the
securities to the public is called the:
a.spread.
b.underpricing.
c.filing fee.
d.new issue premium.
e.extortion premium.

FIRM COMMITMENT OFFERS
e15.The type of underwriting...
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