In Terms of Costs of Issuing Equity, Professor Clifford W

question 57

Multiple Choice

In terms of costs of issuing equity, Professor Clifford W.Smith finds that the ranking of methods, from cheapest to most expensive, is:

• A)rights issue with standby underwriting, equity issue with underwriting, pure rights issue.
• B)pure rights issue, rights issue with standby underwriting, equity issue with underwriting.
• C)pure rights issue, preferred stock and debt issue with underwriting for an IPO, rights issue
• With standby underwriting.
• D)equity issue with underwriting, rights issue with standby underwriting, pure rights issue.
• E)equity issue with underwriting, pure rights issue, rights issue with standby underwriting.

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Definitions:

Principal

The main party to a transaction or contract, or the amount of money on which interest is paid or received.

Ratify

The official approval or confirmation of a treaty, contract, or agreement, making it valid and binding.

Contract

A legally binding agreement between two or more parties that outlines the terms and conditions of a particular arrangement or transaction.

Affirm

To confirm, ratify, or declare positively, often in a legal context such as affirming a judgment.