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The sale of new securities is known as: O primary offering O secondary offering O initial public offering Oshelf offering
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- GW Underwriters retains the difference between its buying price and its offering price on new securities. What is this amount called? Multiple Choice Markup Commission Rights price Spread OfferBriefly discuss how a transfer of securities from the available-for-sale category to the trading category affectsstockholders’ equity and income.Marketable securities bought and held primarily for sale in the near term are classified as: a) Available-for-sale securities. b) Held-to-maturity securities. c) Stock securities. d) Trading securities
- Available-for-Sale Securities The following are four unrelated situations involving investments in available-for-sale securities: Situation I A portfolio of available-for-sale debt securities with an aggregate fair value in excess of amortized cost includes one particular security whose fair value has declined to less than one-half of its amortized cost. The decline in value is considered to be other than temporary. Situation II The portfolio of available-for-sale debt securities includes securities that have an amortized cost in excess of fair value of 500. The remainder of the portfolio has a net fair value in excess of amortized cost of 1,000. Situation III An available-for-sale debt security, whose fair value is currently less than its amortized cost, is reclassified as a trading security. Situation IV A companys portfolio of available-for-sale securities consists of the bonds of one company. At the end of the prior year, the fair value of the security was 95% of amortized cost, and the effect was properly reflected in an allowance account. However, at the end of the current year, the fair value of the debt security had appreciated to 102% of the amortized cost. Required: Explain the effect on classification, earning value, and earnings for each of the preceding situations.A security in a portfolio of available-for-sale securities is transferred to the trading category. The security should be transferred between the corresponding portfolios at: a. book value at date of transfer if higher than the fair value at date of transfer b. fair value at date of transfer, regardless of its cost c. cost, regardless of the fair value at date of transfer d. lower of its cost or fair value at date of transferEvaluate the following statement: “Issuing convertible securities is ameans by which a firm can sell common stock for more than the existingmarket price.”
- When securities are allotted to institutional investors & some selected individuals is referred to Select one: a None b Offer through the prospectus c Offer for sale d Initial public offer e. Private placeUnder which of the following markets previously issued securities are bought and sold? a. None of the options b. Primary Market c. Secondary Market d. Reserve MarketEvaluate the following statement: Issuing convertible securities represents a means bywhich a firm can sell common stock at a price above the existing market price.
- When an investment is acquired, what is the initial reporting basis for all investments in equity securities? Group of answer choices: a) Fair market value b) Equity value c) Discounted present value d) CostUnder which of the following markets securities are newly issued? a. Primary Market b. Intermediary Market c. Money Market d. Bond MarketHeld-to-maturity securities: A. All of these choices. B. include stocks as well as bonds. C. may be reported as current or noncurrent assets. D. are reported at fair market value.
