Question

Which two of the following five statements are correct?

Select two alternatives:

When a private equity firm purchases the outstanding equity of a publicly traded firm using debt financing, thereby taking the company private, the transaction is called a leveraged buyout.

The process of selling stock to the public for the first time is called a seasoned equity offering (SEO).

Individual investors who buy equity in small private firms are called angel investors.

Researchers have found that, on average, the market greets the news of an SEO with a price increase.

The major advantage of undertaking an IPO is also one of the major disadvantages of an IPO: When investors diversify their holdings, the equity holders of the corporation become more concentrated.

Answer 1

Answer-

The first option and third Options are correct.

The first Option is Correct.
When a private equity firm purchases the outstanding equity of a publicly traded firm using debt financing, thereby taking the company private, the transaction is called a leveraged buyout.

The third option is Correct.
Individual investors who buy equity in small private firms are called angel investors.An angel investor is a high net worth individual who provides financial backing for small startups or entrepreneurs,

The second Option is incorrect.
The process of selling stock to the public for the first time is called Initial public offering (IPO).

The fourth statement is incorrect.
Researchers have found that, on average, the market greets the news of an SEO with a price decrease not price increase.

The fifth statement is incorrect.
The major advantage of undertaking an IPO is also one of the major disadvantages of an IPO: When investors diversify their holdings, the equity holders of the corporation become more concentrated.