1) Which types of companies are most likely to use all or most of the IPO proceeds to pay down debt?

A - Venture capital owned tech companies

B - Multi-generational family-owned companies

C - Founder-owned growth companies

D - Private equity owned, former LBOs

2) Which of the following statements is NOT true regarding Angel Investors?

A) Because their capital investment is often large relative to the amount of capital already in place at the firm, they typically receive a sizeable equity share in the business in return for their funds.

B) They are typically arranged as limited partnerships.

C) For many start-ups, the first round of outside private equity financing is often obtained from them.

D) These investors are frequently friends or acquaintances of the entrepreneur.

3) Which of the following statements is FALSE?

A - Underwriters appear to use the information they acquire during the book-building stage to intentionally underprice the IPO, thereby reducing their exposure to losses.

B - In firm commitment IPOs, if the entire issue does not sell out, the remaining shares must be sold at a lower price and the underwriter must take the loss.

C - The major advantage of undertaking an IPO is also one of the major disadvantages of an IPO: When investors diversify their holdings, the equity holders of the corporation become more concentrated.

D - After deciding to go public, managers of the company work with an underwriter, an investment banking firm that manages the offering and designs its structure.