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Question 1
The primary reason that corporations issue securities is to:
Correct The primary reason that a corporation issues stock is to raise funding for further growth of the firm. While certain ancillary benefits exist, such as an increase in public visibility of the firm given hype off the offering, they are not the main goal of the offering.
Incorrect! The primary reason that a corporation issues stock is to raise funding for further growth of the firm. While certain ancillary benefits exist, such as an increase in public visibility of the firm given hype off the offering, they are not the main goal of the offering.
Correct
Incorrect!
Correct
Incorrect!
Correct
Incorrect!
Question 2
X is attempting to purchase B Corp. However, X does not have sufficient operating capital to complete the transaction. As such, X brings Y and Z on board as partners in the transaction. The group of X, Y, and Z together is referred to as:
Correct
Incorrect!
Correct
Incorrect!
Correct It is not uncommon in large securities transactions that no one investor will have sufficient funds to complete the transaction. As such, the lead investor will often locate a group of additional investors that are willing to join the company in completing the deal. In such a situation, this act is known as 'syndicating' the deal and the resultant group is referred to as a syndicate. Syndicates are typical in venture capital and leveraged buyout transactions, along with some mergers.
Incorrect! It is not uncommon in large securities transactions that no one investor will have sufficient funds to complete the transaction. As such, the lead investor will often locate a group of additional investors that are willing to join the company in completing the deal. In such a situation, this act is known as 'syndicating' the deal and the resultant group is referred to as a syndicate. Syndicates are typical in venture capital and leveraged buyout transactions, along with some mergers.
Correct
Incorrect!
Question 3
Go Co needs a great deal of cash in order to complete an acquisition it is attempting. Given this situation, Go's best method of raising funds, given its healthy balance sheet and strong history, is to:
Correct
Incorrect!
Correct
Incorrect!
Correct
Incorrect!
Correct In a situation where a company needs a great deal of cash and the company has a strong operating history, perhaps its best chance of raising such funds in a relatively expedient manner is to conduct some form of securities issuance. If the company already has publicly traded securities, its best bet might be a stock issuance. In other situations, bonds might be the best way of proceeding. Regardless, a public sale of securities is likely to raise a larger sum of cash than can easily be garnered via other funding mechanisms.
Incorrect! In a situation where a company needs a great deal of cash and the company has a strong operating history, perhaps its best chance of raising such funds in a relatively expedient manner is to conduct some form of securities issuance. If the company already has publicly traded securities, its best bet might be a stock issuance. In other situations, bonds might be the best way of proceeding. Regardless, a public sale of securities is likely to raise a larger sum of cash than can easily be garnered via other funding mechanisms.
Question 4
Jump, Inc. would like to raise some funds and is, therefore, completing a public issuance of shares. Jump, however, has a somewhat rocky financial past and is worried about some of the effects of going public because one of the effects of a public issuance is:
Correct
Incorrect!
Correct One ancillary effect of a public issuance is the fact that the company will now be required to make a great many regulatory filings and public disclosures about its financial health and operations. Thus, a company that has something of a rocky financial history might be worried about such disclosures as they might adversely effect the value of the firm in the markets.
Incorrect! One ancillary effect of a public issuance is the fact that the company will now be required to make a great many regulatory filings and public disclosures about its financial health and operations. Thus, a company that has something of a rocky financial history might be worried about such disclosures as they might adversely effect the value of the firm in the markets.