ECM

Out of the following stages of equity funding, which would most likely be the first stage?

• Initial public offering

• Private Equity

• Friends and family capital

• Venture capital

Private Equity refers to

• Firms listed on a stock exchange

• The initial public offering of shares to investors

• Primary shares issued in a public offering

• Firms not listed on a stock exchange

In an Initial Public Offering (IPO), the following is true

• Only primary shares are issued

• Only secondary shares are issued

• Primary shares are those sold by founders or early private equity investors

• Secondary shares are those sold by founders or early private equity investors

Underwriting is a useful provision to a borrower because

• The borrower achieves certainty of funds at a lower cost

• The underwriter of the issue works on a best efforts basis

• The borrower achieves certainty of funding but at a higher cost

• All banks are on an equal footing

What are not so good reason for buying shares in a business when the insiders are selling?

• Need for growth capital

• Succession planning

• Sponsor desire to cash out

• Estate planning

Greenshoe is

• A shoe shining in green colour

• clause that allows underwriters to sell an additional shares at the offering price.

• clause that allows underwriters to stop receiving fees from Sponsor

When the IPO share price falls drastically on first day of trading, what must the underwriter do?

• Dump all shares fast!

• Switch off terminal and not see the price

• Perform stabilization exercise to cushion the price drop

A bookrunner's main role is to

• Commit to publishing research

• Trades the shares to maximize returns for the bank

• Manages/co-ordinates the entire issue preparation process