FINA314 Page 3 of 10 Name: 5. Which of the following statements) is are false 1. Proprietorship is a legal entity created by a state, and it is separate and distinct from its owners and managers. II. Apple producer of iphone) is an example of a limited partnership III. Jenny opened a lemonade stand where she is the sole owner. After 10 years, the ownership structure hasn't changed but her company revenue has grown into a $100 billion company. This is an example of a hig corporation I only d. I and III only ll only c. None of the above choices c. III only 6. Which of the following statements is CORRECT? 2. IPO prices are generally established by the market, and buyers of the new stock must pay the price that prevails at the close of trading on the day the stock is offered to the public. h. It is possible that the price set in an IPO is so low that investors will want to buy more shares than the company wants to sell. In that case, the company will have to issue more shares than it wants to sell In a "Dutch auction," investors who want to buy shares in an IPO submit bids indicating how many shares they want to buy and the price they are willing to pay. The company determines how many share it wants to sell. The highest price that enables the company to sell the desired number of shares is the price that all buyers must pay. d. The term "IPO" stands for Introductory Price Offered, and it is the price at which shares of a new company are offered to the public, It is possible that the price set in an IPO is so high that investors will refuse to buy the number of shares that the company wants to sell. In this situation, the IPO is said to be oversubscribed. 7. A firm's ROE is above the industry average, but both its profit margin and equity multiplier are below the industry average. Which of the following statements is CORRECT? a. Its total assets turnover must equal the industry average. b. Its TIE ratio must be below the industry average. c. Its total assets tumover must be below the industry average. d. Its return on assets must equal the industry average. Its total assets turnover must be above the industry average. 8. From the shareholder perspective, which ratio(s) has the characteristic"higher is better? L Retum On Asset (ROA) 11. Total Debt to Total Capital III. Profit Margin (PM) I only d. I & II only h. ll only e None of the above choices c. lll only