14 practice sets · Page 1 of 1
Because of US Securities Offering Reform ............. can take advantage of a special streamlined shelf registration process that provides for automatic effectiveness of a registration statement upon filing with the SEC (i.e., no SEC review).
only unseasoned issuers
only seasoned issuers
only well-known seasoned issuers (WKSIs)
only seasoned issuers and well-known seasoned issuers (WKSIs)
The Sarbanes-Oxley Act of 2002 (SOX) was largely a response to:
a series of corporate and accounting frauds involving Enron, Arthur Andersen, WorldCom, and numerous others.
a dramatic rise in the US trade deficit.
charges of excessive compensation to top corporate executives.
rising complaints by investors and security analysts over the financial accounting for stock options.
Financial intermediaries .........
do not invest in new long-term securities
include insurance companies and pension funds
include the national and regional stock exchanges
are usually underwriting syndicates
A company can ensure the complete success of a rights offering by making use of a
standby arrangement.
oversubscription privilege.
green shoe provision.
shelf registration.
............. permits what is known as a shelf registration.
SEC Rule 144
SEC Rule 144a
SEC Rule 415
SEC Form 13D
A best efforts offering is sometimes used in connection with a ................. of new, long-term securities.
private placement
privileged subscription
public issue
all of the above
In calculating the value of one right when the stock is selling rights-on, the analyst needs to know the number of rights needed to buy one share of stock and:
the subscription price per share.
the transactions costs involved.
the price-earnings ratio of the firms stock.
the length of the rights offering period.
To say that there is asymmetric information in the issuing of common stock or debt means that
investors have nearly perfect information.
the markets have nearly perfect information.
investors have more accurate information than management has.
management has more accurate information than investors have.
When the investment banker bears the risk of not being able to sell a new security at the established price, this is known as:
a best efforts offering.
underwriting.
shelf registration.
making a market.
In a common stock rights offering the subscription price is generally:
set equal to the current market price of the stock.
set below the current market price of the stock.
set above the current market price of the stock.
set after the stock goes ex-rights.
The actual market value of a right will differ from its theoretical value for all of the following reasons EXCEPT for:
the size of the firms marginal tax rate.
the amount of transactions costs incurred.
investor speculation.
the irregular exercise and sale of rights over the subscription period.
If an investment banker has agreed to sell a new issue of securities on a best-efforts basis, the issue
most likely involves an unusually large stock offering.
most likely involves bonds instead of common stock.
results in no assumption of underwriting risk by the investment banker.
most likely involves a well-established, large company.
A preliminary prospectus is known as a
golden parachute.
red herring.
blue sky.
green shoe.
Letter stock is
a handwritten certificate representing a corporate IOU.
a mass mailing offering a security for sale.
securities issued by the United States Postal Service.
privately placed common stock that cannot be immediately resold to the general public.
