Question

When the source of internally generated funds is not enough to finance other potential value creating opportunities, the organization will raise funds through external sources.

True

False

Investors cannot own shares of a company before it issues an IPO

True

False

When newly issued securities are sold to investors for the first time, it is known as a secondary market offering

True

False

Terms and conditions that are put in place for a company doing a bond offering are covenants.

True

False

A pro-forma statement is an estimate of future financial results

True

False

Changes in the stock price and the number of shares available will evoke changes in the “market cap.”

True

False

After an IPO, the value of a company’s securities is set by the market through the laws of supply and demand

True

False

An example of direct financing is when a company raises funds from commercial banks, insurance companies, pension funds, and venture capital firms.

True

False

The concept of “currency for acquisition” refers the shares of a company being used to acquire other companies.

True

False

Remaining private can reduce the legal and regulatory requirements for a company.

True

False

Answer 1

When the source of internally generated funds is not enough to finance other potential value-creating opportunities, the organization will raise funds through external sources.

True. Internal sourcing of funds is the preferred way to raise capital for a firm as it is the cheapest source of capital.

Investors cannot own shares of a company before it issues an IPO

False. Investors can own shares of a company before it issues an IPO. This type of an investment happens in the primary market.

When newly issued securities are sold to investors for the first time, it is known as a secondary market offering

False. It is called the primary market offering.

Terms and conditions that are put in place for a company doing a bond offering are covenants.

True. Covenants are the terms and conditions that a company offering bonds is bound by.

A Pro-forma statement is an estimate of future financial results.

True. A Pro-forma statement projects a company's financials and it is an estimate.

Changes in the stock price and the number of shares available will evoke changes in the “market cap.”

True. Market cap = Number of shares outstanding * Share Price

After an IPO, the value of a company’s securities is set by the market through the laws of supply and demand

True. Supply and demand in the secondary market determine the value of a company's stock.

An example of direct financing is when a company raises funds from commercial banks, insurance companies, pension funds, and venture capital firms.

True.

Remaining private can reduce the legal and regulatory requirements for a company.

True. A publicly listed company has to follow a lot of legal and regulatory requirements.

Can you please upvote? Thank You :-)