What are the differences between a public debt offering and a private debt offering? Multiple answers may be chosen. A. The public offering has higher cost of issuance B. Only public offering can be bought by retail investors C. The private offering can be completed faster D. Only private offerings have fixed interest rates

What are the differences between a public debt offering and a private debt offering? Multiple answers may be chosen. A. The public offering has higher cost of issuance B. Only public offering can be bought by retail investors C. The private offering can be completed faster D. Only private offerings have fixed interest rates

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter14B: Application Of Black-scholes Option-pricing Formula

Section: Chapter Questions

Problem 2CC

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Which of the following statements about sinking fund is NOT true? A Sinking fund provision facilitates the orderly retirement of the bond issue. B A company would prefer to use sinking fund to call bond if interest rate is below the coupon rate. C A company would use sinking fund to call bond if interest rate is well above coupon rate. D It is a good strategy for a firm to use its sinking fund to call bond if bond sells at a big premium.
What is the biggest disadvantage to be considered when exploring the option of equity financing versus debt financing?
When an investment banker purchases an offering froma bond issuer and then resells it to the public this is known as a: A. Rights offering B. Private placement C. Firm commitment D. Best Efforts E. Standby offering
Which of the following is an advantage of floating rate bonds to investors? Group of answer choices A. Their market value tend to be highly stable regardless of interest rate changes. B. All of these options are correct. C. They are sold at a deep discount. D. They allow for locking in a multiplier of the initial investment.
What causes a gain or loss on the sale of a bond investment? Group of answer choices when the selling company negotiates a better price when the selling price of the bond differs from the book value (cost) of the bond when the selling company has unamortized discounts when the selling company has unamortized premiums
A firm is considering three different financing alternatives: debt, preferred stock, and common equity. an EBIT-EPS chart that shows several indifference points. What does each indifference point show the firm O a. The level of EBIT that generates identical EPS under two alternative financing plans O b. The level of sales that generates identical EBIT and EPS figures O c. It shows the level of EBIT and EPS at which DFL is identical under two alternative financing Od. The level of EBIT that generates different EPS under two alternative financing plans
Due to a lack of information, a trader is not able to retrieve the yield of government bonds as the risk-free rate to use in the pricing of a call option. Instead, the yield of the highest-rated investment-grade corporate bond is considered a close substitute. Explain how this substitution of the risk-free rate would impact the call option price.
Which of the following is NOT an assumption used in deriving the Capital Asset Pricing Model (CAPM)? Investors can buy and sell all securities at competitive market prices without incurring taxes or transactions cost and can borrow and lend at the risk-free interest rate Investors hold only efficient portfolios of traded securities. Investors have homogeneous expectations regarding the volatilities, correlation, and expected returns of securities. Investors have homogeneous risk averse preferences toward taking on risk.
An investment banker most commonly makes money from Group of answer choices A. commissions from buyers. B. artificially supporting the stock price during and after the offering. C. fees from other investment bankers in the syndicate. D. the spread between the issue price and proceeds to the issuer.
Which of the following statements correctly describe characteristics of preference shares? Group of answer choices A. The required return on preference equity is expected to be less than the required return from ordinary equity. B. None of the other statements are correct C. A participating preference share participates in the interest payments paid to debtholders. D. Preference shares are called “hybrid” securities because they display characteristics of both short-term and long-term debt.
If a public firm has a high credit rating, the lowest-cost source of funds comes from a(n) _____. shelf registration registered public offering initial public offering underwritten offering
Which of the following is the best explanation of what the call premium is? Group of answer choices The amount above the face value an investor must pay to purchase the bond. The additional amount above the face value that the company must pay to repay the bond early. The additional amount above the market price that a company must pay to repay the bond early. The amount above the market price that an investor must pay to purchase the bond.