Question : 31.A bond sold in the U.S. by a German based : 1325726

 

 

31.A bond sold in the U.S. by a German based company is an example of a(n)

a.Eurobond.

b.Yankee bond.

c.Samurai bond.

d.none of the above

 

 

 

32.An investment banking firm that generally occupies the lead or co-lead manager’s position in large security offerings is referred to as

a.a bulge bracket firm.

b.a green shoe firm.

c.a Wall Street firm.

d.none of the above.

 

 

 

33.Lead Investment Banking Corp. is the lead underwriter for the equity issuance of NewCorp. Lead is responsible for 80% of the issue at a discount of $1.70 per share. If Lead is responsible for selling 1,300,000 shares then what is the total compensation to the underwriting syndicate?

a.$1,768,000

b.$2,210,000

c.$2,762,500

d.none of the above

 

 

 

34.In general, what is the determining factor in the underwriting spread charged by investment banks?

a.the size of the issue

b.the risk inherent in the security to be issued

c.the name recognition of the underwriter

d.none of the above

 

 

 

35.The most important law governing the sale of new securities is

a.the Glass-Steagall Act.

b.the Securities Act of 1933.

c.the Securities and Exchange Commission Act of 1934.

d.none of the above.

 

 

 

36.Which of the following should not be considered a benefit to a firm that is issuing an IPO?

a.access to additional capital

b.provide an alternative to cash for future acquisitions

c.have another source, other than cash for executive compensation

d.limits the founder’s ownership dilution

 

 

 

37.Which of the following factors might be most important for an entrepreneur that is considering an IPO in an industry where a firm’s strategy is its most important asset.

a.the use of stock as a compensation vehicle

b.the investment banking fee

c.the disclosure requirements of publicly traded firms

d.all of the above are most import to such a firm

 

 

 

38.If Company X intends to distribute shares of its wholly owned subsidiary to its current shareholders in an effort to make the subsidiary a publicly traded company, then Company X is contemplating a(n)

a.equity carve-out

b.spin-off

c.LBO

d.none of the above

 

 

 

39.If you are anticipating purchasing shares of companies that will be offering shares to the public for the first time, your most profitable strategy for purchasing those shares will be

a.to buy them in the primary market.

b.to buy them in the secondary market.

c.buy options on the shares before the IPO date.

d.none of the above.

 

 

 

 

40.If you were to purchase the shares of a firm one month after its IPO as well as the shares of a comparable sized (matched) firm on the same day and then hold both shares for five years, you would expect

a.that the return of the IPO firm’s stock to be greater than that of the matched firm.

b.that the return of the matched firm’s stock to be greater than that of the IPO firm.

c.that the return of the two stocks to be equal.

d.that since the two firms are likely to be uncorrelated the relation cannot be predicted.