FIN 300 Exam 4 Study Guide Questions
with complete solution 2025
RAISING CAPITAL CHAPTER 15 - correct answer ✔
Which of the following are costs of issuing new securities? - correct answer
✔1. The spread
2. Underpricing
3. The Green Shoe option
Dilution of the ownership of existing shareholders can be ________ with a
right offering. - correct answer ✔Avoided
In order to issue a security to the public, management's first step is to
_______. - correct answer ✔Obtain board approval
Whether a firm obtains capital by debt or equity financing depends on: -
correct answer ✔1. The size of the firm
2. The firm's life-cycle stage
3. The firm's growth prospects
The difference between the price the issuer receives and the offering price is
_________ - correct answer ✔The gross spread
Which of the following are true about the venture capital (VC) market? -
correct answer ✔1. Access to venture capital is very limited.
2. Personal contacts are important in gaining access in the VC market.
, An investment bank that underwrites a security issue by buying the securities
for less than the offering price and accepting the risk that the securities wont
sell is using the ____ method - correct answer ✔Firm commitment
Which of the following are important considerations when choosing between
Venture Capitalists? - correct answer ✔1. Style,
2. Exit strategy,
3. Financial strength
The period of time before and after an IPO when communication with the
public is limited is known as the ______ period. - correct answer ✔Quiet
Dilution refers to loss in _____________ shareholders' value - correct answer
✔Existing
The cost associated with new issues are known as _______. - correct answer
✔Flotation costs
The available evidence indicates that there are pronounced cycles of which of
the following? - correct answer ✔1. The number of IPOs
2. The degree of IPO underpricing/pricing
According to a study by lee, Lockhead, Ritter and Zhao, direct expense across
all offerings are ______ for equity offers than for debt offers. - correct answer
✔Greater
In the world of start-up ventures, OPM stands for _______. - correct answer
✔Other people's money
with complete solution 2025
RAISING CAPITAL CHAPTER 15 - correct answer ✔
Which of the following are costs of issuing new securities? - correct answer
✔1. The spread
2. Underpricing
3. The Green Shoe option
Dilution of the ownership of existing shareholders can be ________ with a
right offering. - correct answer ✔Avoided
In order to issue a security to the public, management's first step is to
_______. - correct answer ✔Obtain board approval
Whether a firm obtains capital by debt or equity financing depends on: -
correct answer ✔1. The size of the firm
2. The firm's life-cycle stage
3. The firm's growth prospects
The difference between the price the issuer receives and the offering price is
_________ - correct answer ✔The gross spread
Which of the following are true about the venture capital (VC) market? -
correct answer ✔1. Access to venture capital is very limited.
2. Personal contacts are important in gaining access in the VC market.
, An investment bank that underwrites a security issue by buying the securities
for less than the offering price and accepting the risk that the securities wont
sell is using the ____ method - correct answer ✔Firm commitment
Which of the following are important considerations when choosing between
Venture Capitalists? - correct answer ✔1. Style,
2. Exit strategy,
3. Financial strength
The period of time before and after an IPO when communication with the
public is limited is known as the ______ period. - correct answer ✔Quiet
Dilution refers to loss in _____________ shareholders' value - correct answer
✔Existing
The cost associated with new issues are known as _______. - correct answer
✔Flotation costs
The available evidence indicates that there are pronounced cycles of which of
the following? - correct answer ✔1. The number of IPOs
2. The degree of IPO underpricing/pricing
According to a study by lee, Lockhead, Ritter and Zhao, direct expense across
all offerings are ______ for equity offers than for debt offers. - correct answer
✔Greater
In the world of start-up ventures, OPM stands for _______. - correct answer
✔Other people's money
