LO3: in exchange of lower stakes of
LO3: Illustrate the different ways a companycan raise capital.
Compare the different sources of capital. 1. An example of indirect expense when issuing shares in an IPO, for acompany, is:a. Underwritingspreadb. Legal feesc. Filing feesd. Management time spenton the task 2.
An example of direct expense when issuing shares in an IPO, for acompany, is:a. Underwriting spreadb. Green Shoe provisionsc.
Underpricing spreadd. Management time spent onthe task 3. Which of the following statements about Venture Capital is true?a.
It normally invests inalready established companiesb. It normally requires an exitstrategy as part of the dealc. It normally targets the100% of the share of the target companyd. It normally invests in onecompany an amount in the order of tens of millions of dollar 4. Compared to venture capital firms, private equity firms normally invest:a. Higher amounts in thetarget companies, in exchange of higher stakes of equityb. Lower amounts in thetarget companies, in exchange of lower stakes of equityc. Only in the preferredshares of target companiesd.
Only in the rightsattached to the shares of the target companies 5. An increase in the leverage of the company’s capital structure leads to:a. Increasedequity dilutionb. Increased equityconcentrationc. Increased corporateriskd. Lower interest payments 6. Which of the following statements about debt is true?a.
Senior debt has priority overequity on the assets of the companyb. Junior debt has priorityover Senior debt on the assets of the companyc. Equity has priority overSenior debt on the assets of the companyd. Senior debt and Equityhave priority over Junior debt on the assets of the company