Mini test Raising Capital

Jones & Co. is funded by a group of individual investors for the sole purpose of providing funding for individuals who are trying to convert their new ideas into viable products. What is this type of funding called? 

• green shoe funding
• tombstone underwriting
• venture capital
• red herring funding

What is an issue of securities that is offered for sale to the general public on a direct cash basis called? 

• best efforts underwriting
• general cash offer
• firm commitment underwriting
• rights offer

Tony currently owns 12,000 shares of GL Tools. He has just been notified that the firm is issuing additional shares of stock and that he is being given a chance to purchase some of these shares prior to the shares being offered to the general public. What is this type of an offer called? 

• rights offer
• priority offer
• best efforts offer
• general cash offer

Soup Galore is a partnership that was formed three years ago for the purpose of creating, producing, and distributing healthy soups in a dried form. The firm has been extremely successful thus far and has decided to incorporate and offer shares of stock to the general public. What is this type of an equity offering called? 

• shelf offering
• private placement
• venture capital offering
• initial public offering

Executive Tours has decided to take its firm public and has hired an investment firm to handle this offering. The investment firm is serving as a(n): 

• venture capitalist
• underwriter
• seasoned writer
• primary investor

What is the definition of a syndicate? 

• a venture capitalist
• block of investors who control a firm
• a bank that loans funds to finance the start-up of a new firm
• a group of underwriters sharing the risk of selling a new issue of securities

Denver Liquid Wholesalers recently offered 50,000 new shares of stock for sale. The underwriters sold a total of 53,000 shares to the public. The additional 3,000 shares were purchased in accordance with which one of the following? 

• Green shoe provision
• Red herring provision
• lockup agreement
• post-issue agreement

All new interstate security issues are regulated by the: 

• Securities Exchange Act of 1934.
• Securities Act of 1933.
• Federal Reserve Act of 1931.
• Green Shoe provision.

With Dutch auction underwriting: 

• all successful bidders pay the same price.
• all bidders receive at least a portion of the quantity for which they bid.
• the bidder for the largest quantity receives the first allocation of securities.
• the bidder for the largest quantity receives the first allocation of securities.

If an IPO is underpriced then the: 

• issue is less likely to sell out.
• stock price will generally decline on the first day of trading.
• issuing firm is guaranteed to be successful in the long term.
• issuing firm receives less money than it probably should have.