Raising Capital

What is a primary characteristic of a venture capital (VC) firm's investment strategy?

What is the financing stage known as mezzanine financing, which is intended for a company that is at least breaking even and contemplating expansion?

What is a preliminary prospectus, distributed during the waiting period of an SEC registration, commonly called?

A company wants to sell 400 shares to the public through a Dutch auction. It receives bids from Bidder A for 100 shares at 16 dollars, Bidder B for 100 shares at 14 dollars, Bidder C for 100 shares at 12 dollars, Bidder D for 200 shares at 12 dollars, and Bidder E for 200 shares at 10 dollars. What will be the offer price in the IPO?

What is the typical duration of a lockup period following an IPO, during which insiders are prohibited from selling their stock?

Which of the following is NOT one of the six categories of costs associated with issuing new securities?

What does a Green Shoe provision allow underwriters to do?

What does the concept of 'dilution of stock price' mean for a firm's shareholders?

National Power company has 1 million shares outstanding and plans to raise 5 million dollars through a rights offering. If the subscription price is set at 5 dollars per share, how many rights will be needed to purchase one new share?

According to the table on direct costs for domestic operating companies from 1990-2008, what was the approximate total direct cost as a percentage of gross proceeds for an IPO with proceeds between 2.00 and 9.99 million dollars?

What term refers to a new equity issue by a company whose securities have been previously issued and are publicly traded?

What is a major reason for the significant underpricing of Initial Public Offerings (IPOs)?

For a company to qualify for shelf registration, what is one of the major qualifications it must meet?

What is the primary difference between a rights offer and a cash offer for a new equity issue?

What is the primary characteristic of a best-efforts underwriting agreement?

According to data from 1990-2008, how do the direct costs of issuing straight bonds compare to the costs of issuing equity?

What is the primary reason an acquiring company might experience a drop in its stock price upon the announcement of a merger?

A firm with 1,000,000 existing shares wants to raise 5,000,000 dollars via a rights issue. The subscription price is 10 dollars per share. What is the value of one right if the current stock price is 20 dollars per share?

What is the typical equity stake that a venture capitalist demands in a company?

The Securities Act of 1933 regulates new interstate securities issues, but provides an exception for small issues under Regulation A. What is the maximum value of an issue that can be governed by Regulation A?

What is the primary motivation behind the 'quiet period' mandated by the SEC before and after an IPO?

In a firm commitment underwriting, how is the underwriting syndicate primarily compensated?

What is the term for a direct business loan with a maturity between one and five years?

Why might a firm prefer a private placement of debt over a public issue?

Which statement accurately reflects the empirical evidence on the costs of raising capital presented in the text?

If a firm's stock price is 20 dollars and it undergoes a rights offering where the ex-rights price becomes 16.67 dollars, what is the value of one right?

Which of the following is a key reason for the abnormal drop in a company's stock price upon the announcement of a seasoned equity offering (SEO)?

What is the 'dribble method' in the context of raising capital?

According to the 1960-2010 data, what was the average gross proceeds for an IPO?

Which of the following best describes 'seed money' in the context of venture capital financing?

An all-equity firm, USM, has 1 million shares and annual earnings of 1 million dollars. The discount rate is 20 percent, making the initial share price 5 dollars. If the firm issues new stock to fund a project that costs 2 million dollars and generates 200,000 dollars in perpetual earnings, what will be the new stock price?

What is a primary distinction between issuing long-term debt via a public issue versus a private placement?

What is the primary reason that rights offerings, despite being cheaper, are not the dominant form of seasoned equity offerings in the United States?

In the World Wrestling Federation tombstone advertisement, the offering of 9,200,000 shares in the United States and Canada is referred to as the:

Based on the 1990-2008 data for straight bond offerings, what was the average total direct cost for an investment-grade issue?

What is the primary role of an angel investor in early-stage financing?

In a Dutch auction for 400 shares, the winning price is determined to be 12 dollars. Total bids at 12 dollars or higher amount to 500 shares. What percentage of their bid will successful bidders receive?

What is the primary reason for a company to engage in a rights offering?

If a firm with a book value per share of 10 dollars and a market price of 5 dollars per share issues new stock to fund a zero-NPV project, what is the most likely impact on its book value per share?

Based on the 1990-2008 data, what was the average total direct cost for a Seasoned Equity Offering (SEO) with proceeds of 500 million dollars and up?

A firm needs to raise 5 million dollars. It can either issue stock or conduct a rights offering. The subscription price in the rights offering is 10 dollars. The firm currently has 1 million shares outstanding trading at 20 dollars. How many new shares would be issued under the rights offering?

What is a key difference between angel investors and venture capitalists?

What is the primary purpose of 'bookbuilding' in a public offering?

According to the table on direct costs from 1990-2008, what is the total direct cost for a non-investment grade (junk) straight bond issue with proceeds between 100.00 and 199.99 million dollars?

What is the primary argument against the idea that stock splits are beneficial because they bring the share price into a 'popular trading range'?

What is one of the plausible reasons provided in the text for the drop in a firm's stock price upon the announcement of a seasoned equity offering (SEO)?

How much equity stake do venture capitalists typically require when investing in a company?

Which of the following is a key qualification for a company to be eligible for shelf registration?

If Upper States Manufacturing (USM) has a book value per share of 10 dollars and a market price of 5 dollars, and it undertakes a project with a negative NPV, what will happen to the book value per share?

What is the primary difference between a firm commitment underwriting and a best efforts underwriting?