Test
Lecture 6- Raising capital
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Preguntas del test (42)
1Private equity is general term that describes all kinds of [blank_start]funds[blank_end] that [blank_start]pool[blank_end] money from number of [blank_start]investors[blank_end] in order to amass [blank_start]large[blank_end] amounts of money. They’re then used to acquire [blank_start]stakes[blank_end] in companies
- Afunds
- Bpool
- Cinvestors
- Dlarge
- Estakes
2Non-venture part of private equity is often associated with [blank_start]funds[blank_end] looking for mature, [blank_start]revenue[blank_end] generating companies in need of some [blank_start]revitalisation[blank_end] (associated with [blank_start]buying[blank_end] companies)
- Afunds
- Brevenue
- Crevitalisation
- Dbuying
3Private equity mainly comes from [blank_start]institutional[blank_end] investors & [blank_start]accredited[blank_end] investors, who can dedicate [blank_start]substantial[blank_end] sums of money for [blank_start]extended[blank_end] time periods
- Ainstitutional
- Baccredited
- Csubstantial
- Dextended
4Private placement- [blank_start]Non-public[blank_end] sale of securities to [blank_start]limited[blank_end] number of [blank_start]investors[blank_end]
- ANon-public
- Blimited
- Cinvestors
5Venture capital is like sub section of [blank_start]private equity[blank_end] but often goes into [blank_start]younger[blank_end] companies, generally with [blank_start]high[blank_end] level of risk. Venture capitalists make [blank_start]money[blank_end] by finding good deals in [blank_start]young[blank_end] businesses. They offer to [blank_start]invest[blank_end] set amount of money for [blank_start]stake (share)[blank_end] in company
- Aprivate equity
- Byounger
- Chigh
- Dmoney
- Eyoung
- Finvest
- Gstake (share)
6Venture capitalists may want [blank_start]say[blank_end] in how company is [blank_start]run[blank_end]. Also, they may own [blank_start]portion[blank_end] of business, but compared to [blank_start]private equity[blank_end] firms they rarely buy company [blank_start]outright[blank_end]
- Asay
- Brun
- Cportion
- Dprivate equity
- Eoutright
7Suppliers of venture capital include: old-line [blank_start]wealthy[blank_end] families, private [blank_start]partnerships[blank_end] & [blank_start]corporations[blank_end] (who provide [blank_start]investment[blank_end] funds), large [blank_start]industrial[blank_end] or [blank_start]financial[blank_end] corporations (who have established venture capital [blank_start]subsidiaries[blank_end]) & [blank_start]business angels[blank_end] (investors that act as [blank_start]individuals[blank_end] when providing financing who are not part of [blank_start]partnership[blank_end] or [blank_start]corporation[blank_end])
- Awealthy
- Bpartnerships
- Ccorporations
- Dinvestment
- Eindustrial
- Ffinancial
- Gsubsidiaries
- Hbusiness angels
- Iindividuals
- Jpartnership
- Kcorporation
8First stage of private equity financing is [blank_start]seed money[blank_end]. [blank_start]Small[blank_end] amount of financing needed to prove [blank_start]concept[blank_end] or develop [blank_start]product[blank_end] & [blank_start]marketing[blank_end] is normally not included in this stage
- Aseed money
- BSmall
- Cconcept
- Dproduct
- Emarketing
9Second stage of private equity financing is [blank_start]start-up[blank_end]. [blank_start]Financing[blank_end] for firms that started within [blank_start]past year[blank_end] & [blank_start]funds[blank_end] are likely to pay for marketing & product [blank_start]development[blank_end] expenditure
- Astart-up
- BFinancing
- Cpast year
- Dfunds
- Edevelopment
10Third stage of private equity financing is [blank_start]later stage capital[blank_end]. [blank_start]Additional[blank_end] money is contributed to business to begin [blank_start]sales[blank_end] & [blank_start]manufacturing[blank_end] after firm has spent its start-up [blank_start]funds[blank_end]
- Alater stage capital
- BAdditional
- Csales
- Dmanufacturing
- Efunds
11Fourth stage of private equity financing is [blank_start]growth capital[blank_end]. Funds are earmarked [blank_start](set aside)[blank_end] to enable it to reach its [blank_start]potential[blank_end] & achieve [blank_start]successful growth[blank_end]
- Agrowth capital
- B(set aside)
- Cpotential
- Dsuccessful growth
12Fifth stage of private equity financing is [blank_start]replacement capital[blank_end]. [blank_start]Financing[blank_end] for company to buy out other [blank_start]investors[blank_end] in firm
- Areplacement capital
- BFinancing
- Cinvestors
13Sixth stage of private equity financing is [blank_start]buyout financing[blank_end]. Money provided for [blank_start]managers[blank_end] & outside [blank_start]investors[blank_end] to acquire full functioning [blank_start]firm[blank_end]
- Abuyout financing
- Bmanagers
- Cinvestors
- Dfirm
14First step in public offering is [blank_start]pathfinder prospectus[blank_end] (several [blank_start]months[blank_end] before issue). An initial indicative [blank_start]prospectus[blank_end] is released that presents [blank_start]proposed[blank_end] offering
- Apathfinder prospectus
- Bmonths
- Cprospectus
- Dproposed
15Second step in public offering is [blank_start]pre-underwriting conferences[blank_end] (about [blank_start]4 weeks[blank_end] before full prospectus is issued). Amount of money to be [blank_start]raised[blank_end] & type of [blank_start]security[blank_end] to be issued are discussed. [blank_start]Initial[blank_end] expressions of interest collected & issue price is [blank_start]set[blank_end]. [blank_start]Underwriter[blank_end] & approved [blank_start]adviser[blank_end] will be appointed
- Apre-underwriting conferences
- B4 weeks
- Craised
- Dsecurity
- EInitial
- Fset
- GUnderwriter
- Hadviser
16Third step in public offering is [blank_start]full prospectus[blank_end] (several [blank_start]weeks[blank_end] before offering takes place). [blank_start]Prospectus[blank_end] contains all relevant [blank_start]financial[blank_end] & [blank_start]business[blank_end] information
- Afull prospectus
- Bweeks
- CProspectus
- Dfinancial
- Ebusiness
17Fourth step in public offering is [blank_start]public offering[blank_end] & [blank_start]sale[blank_end] (shortly after [blank_start]last day[blank_end] of registration period). In typical firm commitment contract [blank_start]underwriter[blank_end] buys specified amount of [blank_start]equity[blank_end] from firm & sells it at [blank_start]higher[blank_end] price. [blank_start]Selling group[blank_end] assists in sale
- Apublic offering
- Bsale
- Clast day
- Dunderwriter
- Eequity
- Fhigher
- GSelling group
18Fifth step in public offering is [blank_start]market stabilisation[blank_end] (usually within [blank_start]30 days[blank_end] of offering). [blank_start]Underwriter[blank_end] stands ready to place [blank_start]orders[blank_end] to buy at [blank_start]specified[blank_end] price on market
- Amarket stabilisation
- B30 days
- CUnderwriter
- Dorders
- Especified
19Alternative public issue methods are [blank_start]general cash offer[blank_end] (issue of [blank_start]securities[blank_end] offered for sale to general [blank_start]public[blank_end] on [blank_start]cash[blank_end] basis), [blank_start]rights issue[blank_end] (public issue of [blank_start]securities[blank_end] in which securities are [blank_start]first[blank_end] offered to [blank_start]existing shareholders[blank_end]), [blank_start]initial public offering[blank_end] (company’s first equity issue made to [blank_start]public[blank_end]) & [blank_start]seasoned equity issue[blank_end] (new equity issue of [blank_start]securities[blank_end] by company that has previously issues securities to public)
- Ageneral cash offer
- Bsecurities
- Cpublic
- Dcash
- Erights issue
- Fsecurities
- Gfirst
- Hexisting shareholders
- Iinitial public offering
- Jpublic
- Kseasoned equity issue
- Lsecurities
20Three services that underwriters perform for corporate issuers are [blank_start]formulating (preparing)[blank_end] method used to [blank_start]issue[blank_end] securities, [blank_start]pricing[blank_end] new securities & [blank_start]selling[blank_end] new securities
- Aformulating (preparing)
- Bissue
- Cpricing
- Dselling
21Underwriter- [blank_start]Investment[blank_end] firms that act as [blank_start]intermediaries[blank_end] between company [blank_start]selling[blank_end] securities & [blank_start]investing[blank_end] public
- AInvestment
- Bintermediaries
- Cselling
- Dinvesting
22As underwriting involves [blank_start]risk[blank_end], underwriters combine to form underwriting group called '[blank_start]syndicate[blank_end]' to share [blank_start]risk[blank_end] & help [blank_start]sell[blank_end] issues
- Arisk
- Bsyndicate
- Crisk
- Dsell
23One method of underwriting is [blank_start]firm commitment[blank_end]. [blank_start]Underwriter[blank_end] buys entire issue for [blank_start]less[blank_end] than offering price & accepts [blank_start]risk[blank_end] of not being able to sell them. Difference between underwriter’s [blank_start]buying[blank_end] price & [blank_start]offering[blank_end] price is called [blank_start]spread[blank_end] or [blank_start]discount[blank_end]
- Afirm commitment
- BUnderwriter
- Cless
- Drisk
- Ebuying
- Foffering
- Gspread
- Hdiscount
24Another method of underwriting is [blank_start]best efforts[blank_end]. [blank_start]Underwriter[blank_end] acts as agent, receiving commission for each [blank_start]share[blank_end] sold. [blank_start]Underwriter[blank_end] sells as much of issue as possible, but can return [blank_start]unsold[blank_end] shares to issuer without [blank_start]financial[blank_end] responsibility
- Abest efforts
- BUnderwriter
- Cshare
- DUnderwriter
- Eunsold
- Ffinancial
25Third method of underwriting is [blank_start]Dutch auction[blank_end]. [blank_start]Underwriter[blank_end] does not set fixed price for shares to be [blank_start]sold[blank_end]. Instead [blank_start]underwriter[blank_end] conducts auction in which [blank_start]investors[blank_end] bid for shares. Offer price is determined based on submitted [blank_start]bids[blank_end]
- ADutch auction
- BUnderwriter
- Csold
- Dunderwriter
- Einvestors
- Fbids
26Firm commitments are riskier for [blank_start]underwriters[blank_end] as they don’t know [blank_start]how many shares[blank_end] they will sell. However, best efforts are riskier for [blank_start]firms[blank_end] as [blank_start]unsold shares[blank_end] will be returned back to them
- Aunderwriters
- Bhow many shares
- Cfirms
- Dunsold shares
27Aftermarket- Period after [blank_start]new issue[blank_end] is initially [blank_start]sold[blank_end] to public
- Anew issue
- Bsold
28Many underwriting contracts contain [blank_start]green shoe provision[blank_end]. This is contract provision giving [blank_start]underwriter[blank_end] option to purchase [blank_start]additional[blank_end] shares from issuer at [blank_start]offering[blank_end] price. Also it is called [blank_start]over-allotment option[blank_end]
- Agreen shoe provision
- Bunderwriter
- Cadditional
- Doffering
- Eover-allotment option
29Almost all underwriting contracts contain [blank_start]lock-up agreement[blank_end]. This is part of underwriting contract that [blank_start]specifies[blank_end] how long [blank_start]insiders[blank_end] must wait after an [blank_start]IPO[blank_end] before they can [blank_start]sell[blank_end] equity
- Alock-up agreement
- Bspecifies
- Cinsiders
- DIPO
- Esell
30Quiet period- Period following [blank_start]IPO[blank_end] during which many [blank_start]regulatory[blank_end] authorities place [blank_start]restrictions[blank_end] on public communications of [blank_start]issuer[blank_end]
- AIPO
- Bregulatory
- Crestrictions
- Dissuer
31Determining correct [blank_start]offering price[blank_end] is most difficult thing an underwriter must do for [blank_start]IPO[blank_end]. If offer price is too high, issue [blank_start]will not be successful[blank_end] & have to be [blank_start]withdrawn[blank_end]. If offer price is too low, firm [blank_start]will not receive[blank_end] as much as it could. There must be some level of [blank_start]underpricing[blank_end] to [blank_start]encourage[blank_end] investors to buy
- Aoffering price
- BIPO
- Cwill not be successful
- Dwithdrawn
- Ewill not receive
- Funderpricing
- Gencourage
32Underpricing exists because it helps ensure success of [blank_start]security offering[blank_end], rewards [blank_start]IPO investors[blank_end] for purchasing [blank_start]risky[blank_end] securities, addresses issue of '[blank_start]winner's curse[blank_end]' & rewards [blank_start]institutional investors[blank_end] for information they provide to [blank_start]underwriters[blank_end] regarding potential interest in & value of security issue
- Asecurity offering
- BIPO investors
- Crisky
- Dwinner's curse
- Einstitutional investors
- Funderwriters
33Following announcement of new equity issue, share prices generally [blank_start]decrease[blank_end]. Reasons for this are [blank_start]managerial information[blank_end], [blank_start]debt capacity[blank_end] & [blank_start]falling earnings[blank_end]
- Adecrease
- Bmanagerial information
- Cdebt capacity
- Dfalling earnings
34Costs of new issues are [blank_start]gross spread[blank_end] (consists of [blank_start]direct fees[blank_end] paid by [blank_start]issuer[blank_end] to underwriting [blank_start]syndicate[blank_end]), [blank_start]other direct expenses[blank_end] (incurred by [blank_start]issuer[blank_end] such as [blank_start]filing[blank_end] fees, [blank_start]legal[blank_end] fees & [blank_start]taxes[blank_end]), [blank_start]indirect expenses[blank_end] (costs not reported on prospectus such as management time spent working on new issue), [blank_start]abnormal returns[blank_end], [blank_start]underpricing[blank_end] & [blank_start]green shoe option[blank_end]
- Agross spread
- Bdirect fees
- Cissuer
- Dsyndicate
- Eother direct expenses
- Fissuer
- Gfiling
- Hlegal
- Itaxes
- Jindirect expenses
- Kabnormal returns
- Lunderpricing
- Mgreen shoe option
35RIghts issue- Only for [blank_start]existing[blank_end] shareholders. Normally firms must sell to [blank_start]existing[blank_end] shareholders before going to [blank_start]public[blank_end]. Shareholders have option to buy [blank_start]specified[blank_end] number of new shares from firm at [blank_start]specified[blank_end] price within [blank_start]specified[blank_end] time. Advantages of rights issue are that it appears to be [blank_start]cheaper[blank_end] for issuing firm than cash offers. Also, firm can do rights issue without using [blank_start]underwriters[blank_end] whereas for cash offer [blank_start]underwriters[blank_end] need to be used
- Aexisting
- Bexisting
- Cpublic
- Dspecified
- Especified
- Fspecified
- Gcheaper
- Hunderwriters
- Iunderwriters
36Shareholder choices in rights issue are [blank_start]exercise rights[blank_end] (buy [blank_start]certain[blank_end] number of shares at [blank_start]certain[blank_end] price within timeframe that company has given them), [blank_start]sell all rights[blank_end] (these [blank_start]rights[blank_end] are tradable), [blank_start]sell some rights[blank_end] to raise financing to buy remainder (exercise part of [blank_start]right[blank_end] & other part of right is [blank_start]sold[blank_end]) or [blank_start]do nothing[blank_end] (let rights [blank_start]expire[blank_end])
- Aexercise rights
- Bcertain
- Ccertain
- Dsell all rights
- Erights
- Fsell some rights
- Gright
- Hsold
- Ido nothing
- Jexpire
37Subscription price- Price that [blank_start]existing[blank_end] shareholders are allowed to [blank_start]pay[blank_end] for [blank_start]share[blank_end] of equity. It is declared when [blank_start]right[blank_end] is declared
- Aexisting
- Bpay
- Cshare
- Dright
38Dilution- [blank_start]Loss[blank_end] in existing shareholders’ [blank_start]value[blank_end] in terms of [blank_start]ownership[blank_end], [blank_start]market[blank_end] value, [blank_start]book[blank_end] value or [blank_start]EPS[blank_end]
- ALoss
- Bvalue
- Cownership
- Dmarket
- Ebook
- FEPS
39One way of issuing long-term debt is [blank_start]bank loans[blank_end]. These form [blank_start]major[blank_end] part of debt financing. There are two types & they are [blank_start]line of credit[blank_end] ([blank_start]agreement[blank_end] between bank & firm to [blank_start]borrow[blank_end] up to certain point) & [blank_start]loan commitment[blank_end] ([blank_start]arrangement[blank_end] that requires bank to lend up to [blank_start]maximum[blank_end] prespecified loan amount at prespecified interest rate)
- Abank loans
- Bmajor
- Cline of credit
- Dagreement
- Eborrow
- Floan commitment
- Garrangement
- Hmaximum
40Two types of loan commitment include: [blank_start]revolving[blank_end] (loan commitment in which [blank_start]funds[blank_end] flow back & forth between [blank_start]bank[blank_end] & [blank_start]firm[blank_end] without any predetermined schedule up to [blank_start]maximum[blank_end] amount that loan commitment is [blank_start]agreed[blank_end] upon) & [blank_start]non-revolving[blank_end] (loan commitment where [blank_start]firm[blank_end] cannot pay down [blank_start]loan[blank_end] & then subsequently [blank_start]increase[blank_end] amount of borrowing)
- Arevolving
- Bfunds
- Cbank
- Dfirm
- Emaximum
- Fagreed
- Gnon-revolving
- Hfirm
- Iloan
- Jincrease
41Another way of issuing long-term debt is [blank_start]public issue[blank_end] of [blank_start]bonds[blank_end]
- Apublic issue
- Bbonds
42Two forms of direct private long-term financing include: [blank_start]term loans[blank_end] (direct business [blank_start]loans[blank_end] which have maturities between [blank_start]one[blank_end] to [blank_start]five[blank_end] years) & [blank_start]private placement[blank_end] ([blank_start]loans[blank_end] provided directly by limited number of [blank_start]investors[blank_end] which are similar to [blank_start]term[blank_end] loans but maturity is [blank_start]longer[blank_end])
- Aterm loans
- Bloans
- Cone
- Dfive
- Eprivate placement
- Floans
- Ginvestors
- Hterm
- Ilonger
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- El usuario ha eliminado su información de asignaturas Test sobre Lecture 6- Raising capital, creado por Usuario eliminado el 12/07/2021.
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