Which of the following statements is NOT true about Initial Public Offerings? A. An IPO occurs when a private company sells stock to the public for the first time B. IPOs are less risky than a typical stock market investment since they are typically smaller companies C. When an IPO occurs, a company raises money from public investors that they use to grow their business D. IPOs are risky investments since the company going public often has a limited track record of performance

Which of the following statements is NOT true about Initial Public Offerings? A. An IPO occurs when a private company sells stock to the public for the first time B. IPOs are less risky than a typical stock market investment since they are typically smaller companies C. When an IPO occurs, a company raises money from public investors that they use to grow their business D. IPOs are risky investments since the company going public often has a limited track record of performance

Business/Professional Ethics Directors/Executives/Acct

8th Edition

ISBN:9781337485913

Author:BROOKS

Publisher:BROOKS

Chapter3: Ethical Behaviour- Philosophers Contributions

Section: Chapter Questions

Problem 5Q

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In the context of Initial Public Offerings (IPO), what is the main drawback of the book-building process? The fact that it may lead to overpricing of the company's shares The fact that the share allocation process is not transparent and may lead to quid-pro-quo and other forms of collusion between institutional investors and underwriters The fact that it may fail to attract institutional investors, thus leaving the company with few or no institutional analysts to issue recommendations on the company's shares The fact that the IPO may fail due to lack of venture capitalists backing
Which of the following statements is true? Group of answer choices a. Dividend payments are attractive to executives who hold many executive stock options that were awarded to them by their firms b.Executives and other insiders benefit most by being able to tender their shares in an open market repurchase since they usually are privy to information that is not available to the general public c.Empirical research suggests that small, retail investors prefer stock repurchases to dividend payments d. a firm does not pay dividends, some institutional investors are prohibited from investing it the firmʹs equity
Investment bankers argue that "pop" at an IPO is great for the company. "Pop" occurs when the stock price jumps following the IPO. Investment bankers contend this is an expression of strong interest in the company's stock and is in effect free PR for the company. Evaluate this argument.
Which of the following statements is NOT CORRECT? (A) Going public establishes a firm's true intrinsic value and ensures that a liquid market will always exist for the firm's shares (B) Publicly owned companies have sold shares to investors who are not associated with management, and they must register with and report to a regulatory agency such as the SEC. (C) When stock in a closely held corporation is offered to the public for the first time, the transaction is called "going public." and the market for such stock is called the new issue market (D) It is possible for a firm to go public and yet not raise any additional new capital (E) When a coporation';s shares are owned by a few individuals who own most of the stock or are part of the firm's management, we say that the firm is "closaly, or privately, held.
Which of the following is a disadvantage of a company going public? Going public mandates compliance with ongoing SEC disclosure requirements. The amount of equity capital that can be raised in the public equity markets is typically less than the amount that can be raised through private sources. A company can raise equity capital only once by going public. There are millions of investors in public stock markets, and it is not easier for firms to reach these investors through public markets.
Which of the following would not be an appropriate reason for a firm to repurchase its stock: As an investment if management believes the market has undervalued the stock price. In order to have sufficient shares to cover employee stock programs. Solely to boost Earnings Per Share. Both A and B.
Which one of the following is true regarding venture capitalists? I. They are large shareholders of the issuing firms and exit their investment in initial public offerings. II. They are large investors who want to buy the shares in initial public offerings. III. They tend to invest in young risky ventures. IV. They like underpricing in initial public offerings. A. I and II B. I and IV C. I, III, and IV D. I, II, III, and IV Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Which is the best explanation of how dividends could convey information to investors that could affect the value of a firm? A. Promises to pay dividends limit the ability of managers to accumulate too much cash and to make unwise investments with that cash. B. Investors are skeptical when managers claim that prospects for the firm are bright, but by committing to paying a dividend, managers are adding credibility to their statements about the firm's future. C. Dividends are a more tax efficient way to generate returns for shareholders. D. By paying dividends consistently, investors will come to see dividend payments as less risky than capital gains. Give typing answer with explanation and conclusion
Corporations typically do not first raise capital by issuing stock to the general public. What are the common stages of equity financing leading to an initial public offering (IPO)?
Which of the following does not apply to secondary markets? Group of answer choices Many investors might be unwilling to provide resources to corporations if there is no available mechanism for the future sale of their stocks and bonds to others. Transactions help to establish market prices for additional shares that may be issued in the future. Transactions are important to the efficient allocation of resources in our economy. New resources are provided when shares of stock are sold by the corporation to the initial owners.
Which of the following is true about IPO? A) Investment banks form underwriter syndicate.B) Road show is not necessary.C) Book buildings are only open to private equities.D) IPO bid winner will pay higher price than the true value of the stock.
Which of the following statements is CORRECT? Select one: a. Stock splits create more administrative problems for investors than stock dividends, especially determining the tax basis of their shares when they decide to sell them, so today stock dividends are used far more often than stock splits. b. Back before the SEC was created in the 1930s, companies would declare reverse splits in order to boost their stock prices. However, this was determined to be a deceptive practice, and reverse splits are illegal today. c. When firms are deciding on the size of stock splits--say whether to declare a 2-for-1 split or a 3-for-1 split, it is best to declare the smaller one, in this case the 2-for-1 split, because then the after-split price will be higher than if the 3-for-1 split had been used. d. When a company declares a stock split, the price of the stock typically declines--for example, by about 50% after a 2-for-1 split--and this necessarily reduces the total market value of…