Question : 41.If you an investor that owns shares in a firm : 1325727

 

 

41.If you are an investor that owns shares in a firm that you believe is about to issue additional equity, then you would expect the price of your shares to

a.increase.

b.be unaffected.

c.decrease.

d.all three of the above could happen with equal probability.

 

 

 

42.If a firm is going to issue additional equity by offering existing shareholders the right, or the ability to sell to someone else that right, to purchase the offering then that is called a

a.general cash offering.

b.rights offering.

c.seasonal rights offering.

d.none of the above.

 

 

 

43.Which of the following would most likely get a firm in trouble if it sold private placement securities to this investor?

a.pension fund

b.venture capitalist

c.retiree

d.none of the above

 

 

 

44.Which of the following is a valid concern for an investor who is considering purchasing a bond which has been issued under Rule 144A?

a.Rule 144A issues are less liquid than public issues

b.Rule 144A issues are traded in the secondary market too actively to accurately value them

c.Rule 144A issues can never be repurchased by the issuing firm

d.none of the above

 

 

 

45.One reason that a U.S. based firm might want to issue its equity in international markets is

a.that the firm will be able to raise markedly more capital, through a much higher security price, in the international markets.

b.that an international issue may help a company integrate itself into a international local business scene.

c.that U.S. Securities Law states that international ownership has no voting rights.

d.none of the above.

 

 

 

46.A non-U.S. based company would like to issue a form of its common equity in the U.S. A current method for doing so would be

a.to contract for a U.S. investment back to issue a sponsored ADR.

b.to let a U.S. investment bank issue an unsponsored ADR.

c.to sell put options on its own stock to U.S. investors.

d.none of the above.

 

 

 

47.American Depository Receipts provide U.S. investors with

a.the ability to purchase foreign securities in the foreign company’s domestic currency.

b.the ability to purchase foreign securities in U.S. dollars.

c.the ability to purchase U.S. securities in foreign currency denominations.

d.none of the above.

 

 

 

48.An example of a share privatization issue would be

a.the public issue of securities representing ownership in the telephone system which is currently owned by the government of a foreign country.

b.the public issue of securities representing ownership in a firm that is currently privately owned by a foreign citizen.

c.the private issue of securities representing ownership in a firm that is currently privately owned by a foreign citizen.

d.none of the above.

 

 

 

49.Most of the short-term capital gains of share privatization IPOs are captured by

a.investors and citizens who vote in the country of the firm that is being privatized.

b.the investor base that is determined to pay the maximum price for the IPO.

c.the international monetary fund that helped inject much of the initial capital for the initial start up.

d.none of the above.

 

 

 

50.One characteristic of share privatizations is

a.that they are generally much larger than the IPOs of their private-sector counterparts.

b.that they are generally much smaller than the IPOs of their private-sector counterparts.

c.that the decision to privatize is made solely on economic grounds.

d.none of the above.

 

 

 

 

51.Assume that you purchase shares of a company that recently executed an IPO at the post-offering market price of $32 per share, and you hold the shares for one year. You then sell your shares for $36 per share. The company does not pay dividends, and you are not subject to capital gains taxation. What net return did you earn on your share investment?

a.11.11%

b.12.00%

c.12.50%

d.13.00%

 

 

 

52.Assume that you purchase shares of a company that recently executed an IPO at the post-offering market price of $50 per share, and you hold the shares for one year. You then sell your shares for $52.50 per share. The company does not pay dividends, and you are not subject to capital gains taxation. What net return did you earn on your share investment?

a.2.50%

b.4.81%

c.5.00%

d.7.50%