41.If a shareholder or an investor wants to acquire a

Question : 41.If a shareholder or an investor wants to acquire a : 1409492


41.If a shareholder or an investor wants to acquire a new share of stock under a rights issue, he/she must: 

A. buy call options on the stock.

B. acquire the appropriate number of rights per share and subscription price per share and submit them to the subscription agent.

C. acquire the correct number of rights per share and submit them to the subscription agent.

D. register his order with the NYSE.

42.Which of the following is a possible exception to the efficient-market theory? 

A. Underwriters charge investors more for IPO shares than they pay the issuing firms.

B. IPO spreads are lower on larger issues.

C. The issuance of equity is interpreted as an unfavorable signal by investors.

D. The long-run returns of IPOs tend to underperform the market.

43.The New Word Corporation has 1,000,000 shares outstanding at $30/share. If the firm wishes to raise $13.5 million at a subscription price (North American rights offering) of $27/share, calculate the value of a right. 

A. $1/right

B. $2/right

C. $3/right

D. $4/right

44.When a company sells an entire issue of securities to a small group of institutional investors like life insurance companies, pension funds, etc., it is called a(an): 

A. rights offering.

B. general art offering.

C. private placement.

D. unseasoned issue.

45.SEC registration is not required when a company makes a: 

A. private placement of securities.

B. public offering of securities issue having a value less than $5 million and a maturity less than nine months.

C. public offering of securities having a value greater than $5 million.

D. both A and B.

46.The SEC provision under which qualified institutional investors can trade privately placed securities among themselves is called: 

A. Rule 144A.

B. Rule 415.

C. the Sarbanes-Oxley Act.

D. none of the options.

47.What term might be used to describe an underwriter who influences an analyst in the same firm to modify a report so as to create a favorable impression of a securities issue? 

A. SOX compliance

B. spinning

C. conflict of interest

D. Chinese wall

48.What costs in an IPO generally exceed all other costs? 

A. commissions

B. issues fees

C. spreads

D. underpricing



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