1

a)Which one of the following statements is NOT true?

Select one:

A. The need for funding does not end when a company goes public.

B. Approval is obtained from the board of directors to issue securities.

C. The lowest-cost source of external funds is often an open offer to the public.

D. The investment bank decides how much money the company needs to raise and what type of security - such as debt, ordinary shares or preference shares - to issue.

b)All of the following are costs of an IPO EXCEPT:

Select one:

A. Liquidity.

B. Underwriting spread.

C. Out-of-Pocket expenses.

D. Underpricing.

c)Which one of the following statements is NOT true?

Select one:

A. In best-effort offering, the underwriters will suffer a financial loss if the offer price is set too high.

B. In best-effort agreement, the issuing company will lose if the offer price is set too high.

C. If the underpricing is significant, the investment banking company will suffer a loss of reputation for failing to price the new issue correctly and raising less money for its client than it could have.

D. Underpricing is defined as offering new securities for sale at a price below their true value.