9.

Which of the following statements accurately describe the characteristics associated with a company listing on the stock exchange in an IPO?

Group of answer choices

Original shareholders are not allowed to sell more than 49% of their shares in the IPO to protect the interests of IPO investors.

More than one of the other statements accurately describe the characteristics associated with a company listing on the stock exchange in an IPO.

IPO underpricing an indirect cost to the original investors in the company.

It makes it more difficult to undertake special deals for company insiders.

None of the other statements accurately describe the characteristics associated with a company listing on the stock exchange in an IPO

10.

Question 10

Which of the following statements accurately describe similarities and/or differences between rights issues and private placements?

Group of answer choices

None of the other statements accurately describe the similarities and/or differences between rights issues and private placements.

There are no limitations on how much capital can be raised via rights issues and private placements.

Prospectus is not legally required in both rights issues and private placements.

Private placements usually take longer than rights issues.

More than one of the other statements accurately describe the similarities and/or differences between rights issues and private placements.

Question 11

You are asked to evaluate a finance lease for an asset needed for a potential investment. You calculate that the NPV for the lease versus buy analysis is $20,000. You also calculate that the NPV of the investment is $45,000.

Given your analysis, which of the following statements accurately describe the lease versus buy decision for this investment?

Group of answer choices

You should lease this asset as long as the lease premiums are less than $20,000 per year.

You should lease this asset as you would be better off by $45,000 than if you borrow to buy the asset.

As the project has positive NPV, you are indifferent between leasing the asset or borrowing to buy it.

None of the other statements accurately describe how this result should be interpreted.

More than one of the other statements accurately describe how this result should be interpreted.

Question 19

Which of the following statements accurately describes the factors affecting firm capital structure?

Group of answer choices

Issuing equity can help to reduce free cash flow problem, hence profitable firms with few positive NPV projects tend to have lower debt to equity ratio.

More than one of the other statements accurately describes the factors affecting firm capital structure.

Firms with high proportion of intangible assets tend to have lower debt to equity ratio.

None of the other statements accurately describes the factors affecting firm capital structure.

A newly established high-tech firm tends to have high level of debts to finance its growth.