Which of the following statements is true? O The secondary market is important because its existence increases the amount of capital that publicly traded firms can raise when they issue securities. O The secondary market is unimportant for publicly traded firms. O The secondary market is important because it is where publicly traded firms raise capital.
Q: The cost of equity capital for non-dividend paying stocks can be determined by ____. I. using the…
A: CAPM = Risk free Rate + Beta * Market Risk Premium As per Dividend Discount Model,Ke = (D1/P0) +…
Q: Which of the following is a characteristic of preferred stock? A. Give voting rights to its owner.…
A: Preferred Stock: They are the combination of equity shares and debt components of capital structure.…
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A: The company needs capital for growth and expansion and there are many ways to raise the capital and…
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A: Various methods may be used to determine the cost of capital
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A: Because you have posted multiple questions, we will answer only the first question and for the…
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A: “Since you have asked multiple question, we will solve the first question for you. If you want any…
Q: (c) Explain why a firm's decision to pay dividends versus repurchase shares is important in perfect…
A: Dividends and share repurchase are two methods to share net income with shareholders.
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A: Common Stock : Common stock is a type of security that represents ownership of equity in a company.…
Q: True or false According to the pecking order theory of capital structure firms should never issue…
A: Capital structure is the combination of different sources of finance for the company's assets.…
Q: Which of the following statements is correct? O Flotation costs under a best-efforts arrangement…
A: The process of issuing shares of a private firm to the public in a new stock issue is known as an…
Q: Which of the following statements is FALSE? O A. Public companies typically have access to much…
A: Public companies have large capital raised through public markets, hence statement (A) is true.
Q: Which of the below is NOT TRUE with respect to secondary markets A. Secondary markets assist…
A: Primary market - is the place where company sell new shares to the investors for the first time i.e…
Q: Which of the following statements is CORRECT? O a. Money markets are markets for long-term debt and…
A: Option a. is incorrect because money markets deal in short term securities having a maturity period…
Q: a Rights Issue? (a) The sale of rights to a bond coupon. (b) The right of shareholders to have the…
A: Right issue is the way of raising additional capital via issuance of new equity shares to existing…
Q: Which is true about the primary market versus the secondary equity market? The primary market is for…
A: The primary and secondary markets: The primary market is the market where companies issue stock…
Q: Which of the following is not an advantage of going public
A: Going 'public' means that a privately held company becomes listed after offering an IPO and hence…
Q: Which of the following factors influence a firm's ability and/or willingness to pay dividends? a.…
A: A dividend refers to the distribution of profits to the shareholders of the company. A dividend is…
Q: Which of the following statements is false? O A. Public companies typically have access to much…
A: Public companies follow the process of initial public offering (IPO) in which company raises capital…
Q: Firms raise capital from investors by issuing shares in the primary markets. Does this imply that…
A: in the secondary market, securities that have already been issued will be bought and sold. The…
Q: What method would be the least risky to raise capital if it has a less-than-favorable credit rating?
A: K Corporation is trying to raise capital. Capital is needed by any company for growth purpose. So K…
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A: The capital structure of a firm relates to the exact proportion of the debt and the equity utilized…
Q: The cost of equity capital for non-dividend paying stocks can be determined by ____. I. using the…
A: CAPM = Risk free Rate + Beta * Market Risk Premium
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A: When a firm or company needs capital to grow or start a new project then it uses debt or equity or…
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A: The market where shares are issued and traded, either through exchanges or over-the-counter markets,…
Q: stock markets protect a firms shares from liquidity? true or false
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Q: Under which condition an external equity financing can be advantageous? Group of answer choices…
A: Raising funds via external equity means raising funds via equity share capital to finance the assets…
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A: Leveraged Buyouts is the process of buying another company using money from outside sources, such…
Q: Does it matter if the firm raises capital through debt or equity? Why or Why not?
A: Debt involves borrowing money that is to be repaid including the interest. Whereas equity involves…
Q: Which of the following characteristics are not an advantage of being a publicly traded company?…
A: A public company, publicly traded company, publicly held company, publicly listed company, or public…
Q: Which among the following statement is true? While converting the securities company's EPS will…
A: Earning per share means the profit earned after taxes per share outstanding. Diluted earning per…
Q: how would participants interact to facilitate capital market activities?
A: Capital market is the market that deals in financial assets, which have a longer or indefinite…
Q: Which of the following is an example of an action done by a firm to conduct financial structuring?…
A: A corporation's financial structure refers to the mix of debt and equity used to support its…
Q: Which is false about long-term sources of a firm's capital? * , O All types of corporations may…
A: Long-term sources in accounting: The term 'Long-term' indicates the time span of more than one year.…
Q: How does a cost-efficient capital market help reduce the prices of goods and services? Describe the…
A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: Which firm has riskier equity? Why?
A: Equity means the ownership interest of the company or the firm. Equity is arrived at by subtracting…
Q: articipate in the ownership of the firm. (b) Investors in debt are paid interest. (c) Debt is more…
A: Debt capital consists of the securities that represent lenders or financial creditors to the firm.…
Q: What are some of the reasons why investors post IPOs into the primary markets?
A: An initial public offering occurs when a private firm sells its first shares of stock to the general…
Q: How does a semi-strong market affect a company’s capital structure? Discuss the possible exposures…
A: Semi-strong is referred to as the form of the market efficiency, which used to exist for the…
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- Secondary Market can be best described in which of the following statement? a. It is a market for an unlisted company to raise equity capital. b. It is a market where securities are issued through private placement. c. It is a market in which short-term money market instruments such as Treasury bills are traded. d. It is a market in which preowned securities are traded.Which of the following is an appropriate goal for the firm? Select one: a. All of these b. In secondary markets, outstanding shares of stock are bought and sold among investors. c. An active secondary market causes firms to sell their new debt or equity issues at a higher cost of funds. d. A secondary market allows investors to share their risk and return e. For an investor, the function of secondary markets is to provide profitability for the shares of securities they own.Which is false about long-term sources of a firm’s capital? a. Preferred shares are securities whose intrinsic value is based on prospective earnings b. Some types of bank loans may require collateral from potential debtors c. Retained earnings are internal sources of funding that can be utilized for expansion d. All types of corporations may issue equity securities to the public
- Which of the following statements is NOT true of PIPE transactions? In a PIPE transaction, investors purchase securities (equity or debt) directly from a publicly traded company in a private placement. PIPE transaction gives issuers faster access to capital. The securities are virtually always sold to the investors at a discount to the price at which they would sell in the public markets. PIPE transactions are registered with the SEC.Under which condition an external equity financing can be advantageous? Group of answer choices When a firm wishes to raise additional capital by selling a portion of the existing owners' stock while maintaining control of the firm When a firm's capital structure contains more equity than debt All of the above When common stock becomes less risky to the firm than fixed-income securitiesFor which of the following purposes is it LEAST logical for a company to issue equity securities on the primary market? For capital raising For liquidity improvement For increasing the return on equity None of the options. All of the given purposes support primary shares issuance.
- a. What are the risks and rewards of investing in the stock market as compared to the bond market?b. “Because corporations do not actually raise any funds in secondary markets, they are less important to the economy than primary markets.” Comment.i. Critically examine the factors that necessitate the issue ofpreference shares by companies. ii. Most companies in our part of the world prefer to befinanced by ordinary capital to preference capital. DiscussIn the equities capital markets, participants play key roles to support primary and secondary capital markets. Participants include investors, speculators, market makers, underwriters, and brokers. how would participants interact to facilitate capital market activities? For example, when there is a Federal Reserve action that affects interest rates, how might the various participants interact with a company going through an acquisition?
- Which of the following statements is false? A. Mutual funds are pool investor funds to purchase financial instruments and thus reduce risks through diversification. B. Initial public offering (IPO) occurs when firm issues stock in the public market for the first time. C. The difference between current assets and non-current assets equals to working capital. D. Owner’s equity is the residual interest in assets that remains after subtracting an entity’s liabilities.Which of the following is correct? Transactions within the spot market can be used to mitigate and hedge risk. In an efficient market, it is not possible that a stock of the firm has a price equal to its intrinsic value. Index funds are funds that reflect the performance of a specific index An example of an indirect transfer of capital through investment banks is when an investor buys a unit of a fund from a bank that is invested in various financial assets such as bonds and stocks of other companies.In the equities capital markets, participants play key roles to support primary and secondary capital markets. Participants include investors, speculators, market makers, underwriters, and brokers. when there is a Federal Reserve action that affects interest rates, how might the various participants interact with a company going through an acquisition?