An investor mu st purchase the stock prior to the

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Unformatted text preview: prior to the _____ __________ date in order to be considered the own er of the stock on the holder-of-record date. At the close of trading on the fifth day prior to the holder-of-record date, the stock goes _____ _________ _ so that any subsequent purchaser does not receive the right. (p. 469) 9. As long as shareholders either _____ _________ ______ or _____ _________ ______ their rights, they are not harmed by the rights offering and the subsequent decline in stock price. If the investor allows a right to expire, she suffers a loss equal to _____ _________ ______. (p. 472) 10. Dilution of voting rights (does/does not) occur if the new issue is a rights offering. If the new issue is a public offering, and if an existing stockholder does not purchase any of the new shares, dilution of voting rights (does/does not) occur. (p. 475) 11. Accou ntin g dilution is reduction in both _____ _________ ____ per share and _____ _________ ____. Whether a new stock issue results in accounting dilution depends on the _____ _________ ___ and the firm's _____ _________ _____. Mark et value dilution is a decrease in the _____ _________ ____ of the firm's stock following the issue of new shares of com mon stock. Mark et value dilution (does/does not) occur if the funds obtained are used to finance a negative-NP V project. (p. 476) | v v 130 | e-Text Main Menu | Textbook Table of Contents | Study Guide Table of Contents 12. A public issue of bonds requires that the issuer file a _____ _________ ______ statement with the SEC . More than 50% of all debt is directly placed, either as _____ _________ ______ loans or _____ _________ ______ placemen ts. A _____ _________ ______ loan is a direct business loan that is norm ally amo rtized over a period of one to five years. A _____ _________ ______ placemen t is similar to a term loan except that the _____ _________ ______. (p. 477) 13. A corporation may register with the SEC an offering it expects to sell within the next two years. This _____ _________ ______ procedure permits the firm to sell a portion of the issue any time during the two-year period. (p. 478) ANSWE RS TO CO NCE PT TE ST 1. 2. 3. 4. 5. 6. 7. Venture capital; first-stag e financing; second-stage financing; own ersh ip share registration; Securities and Exchan ge Com mission; waiting period; prospectus cash; rights; cash; rights; initial public; unseasoned new issue; seasoned investmen t bank; spread; discount; underwriter; firm-com mitment; best-efforts; issuing firm opportunity; fails to sell; underpriced articles of incorporation; rights; privileged; subscription; expire market price; funds to be raised/subscription price; price per share before the rights offering, price per share after the rights are exercised one; ex-rights; ex-rights; ex-rights exercise; sell; the value of a right does not; does book value; EPS ; selling price; return on equity; market value; does registration; term; private; term; private; maturity is longer shelf registration 8. 9. 10. 11. 12. 13. PROBL EMS 1. Yul Com pany has just...
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