Fill in the blank using a number of terms listed below (@1 point).

After-tax, B/S, Capitalized, Capital lease, Cost of capital, Financial, Leverage, Operating, PV, Sale/leaseback, Synthetic lease, Tax-consideration, Technological-Obsolescence, Accounting profits, Best effort sale, Depreciation, Descending price, Dutch auction, EPS, Expected- inflation, Going public, Incremental CFs, Margin, NASD, Private- placement , Prospectus, Quiet period, Registration, Scenario analysis, SEC, Securitization, Simulation analysis, Spread, Tax effects, Underwriting,

16. After the registration has become effective, the securities, accompanied by the prospectus, may be offered for sale. ________________is an industry group primarily concerned with the operation of the over-the-counter (OTC) market.

17 In a _ ______________, the investment banker is only committed to making every effort to sell the stock at the offering price. In this case, the issuing firm bears the risk that the new issue will not be fully subscribed.

18. By __________________, the investment banker agrees to buy the entire issue at a set price, and then resells the stock at the offering price. Thus, the risk of selling the issue rests with the investment banker.

19. __________________ is the process whereby financial instruments that were previously thinly traded are converted to a form that creates greater liquidity (junk bonds). It also applies to the situation where specific assets are pledged as collateral for securities, and hence asset-backed securities are created (mortgage-backed securities).

20. _________________, also known as __________ __ auction, uses a bidding process to find an optimal market price for the stock, the highest price at which an issuing company can sell all the available shares.

21. Conceptually, leasing is similar to borrowing, and it provides the same type of financial _______________.

22. Under a(n) _________________ arrangement, the seller receives the purchase price of the asset but retains the use of the property.

23. _________________ leases include both financing and maintenance arrangements from the lessor; the cost of the maintenance is built into the lease payments.

24. A(n) ________________ lease is similar to a sale and lease back arrangement, but generally applies to the purchase of new equipment directly from the manufacturer.

25. A lease classified as a capital requires that the asset must be capitalized and shown directly on the balance sheet, and that the ______________ of the future lease payments be shown as debt.

26. ____________________ are often an important motive behind financial leases, because the full amount of the lease payments is a tax-deductible expense and because of depreciation write-off.

27. Since leasing is a substitute for debt financing, and since lease cash flows have approximately the same risk as debt cash flows, the appropriate discount rate is the __________________ cost of debt.

28. Assets that face rapid and uncertain _________________ are often leased.

29. A lease that complies with all the IRS requirements for a genuine lease is called a(n) ______________ lease.

30. A ___________________ is an arrangement between a company and a special purpose entity (SPE) that it creates to borrow money and purchase equipment. Although the lease amounts to actually borrowing money guaranteed by the lessee, it doesnt appear on the companys book as an obligation.

31. Since some leases do not appear on its ___________, a firm may be able to use more debt than a firm that borrows to finance its assets.

32. When the present value of the lease payment is equal to or greater than 90% of the initial value of the asst, it must be ______________ and shown directly on the balance sheet. It is classified as a ___________________.