Chapter 20 - Issuing Securities to the Public 20-1 Chapter 20 Issuing Securities to the Public Multiple Choice Questions1. An equity issue sold directly to the public is called: A. a rights offer. B. a general cash offer. C. a restricted placement. D. a fully funded sales. E. a standard call issue. 2. An equity issue sold to the firm's existing stockholders is called: A. a rights offer. B. a general cash offer. C. a private placement. D. an underpriced issue. E. an investment banker's issue. 3. Management's first step in any issue of securities to the public is: A. to file a registration form with the SEC. B. to distribute copies of the preliminary prospectus. C. to distribute copies of the final prospectus. D. to obtain approval from the board of directors. E. to prepare the tombstone advertisement. 4. A rights offering is: A. the issuing of options on shares to the general public to acquire stock. B. the issuing of an option directly to the existing shareholders to acquire stock. C. the issuing of proxies which are used by shareholders to exercise their voting rights. D. strictly a public market claim on the company which can be traded on an exchange. E. the awarding of special perquisites to management. Chapter 20 - Issuing Securities to the Public 20-2 5. Companies use tombstone advertisements in the financial press to: A. announce the death of the company. B. announce the failure of a financial strategy. C. announce the availability of a new issue of a corporate security. D. notify the public of foreclosure. E. None of the above. 6. The first public equity issue made by a company is a(n): A. initial private offering. B. initial public offering. C. secondary offering. D. s...
