Which One of the Following Is Correct About Security Offerings

question 218

Multiple Choice

Which one of the following is correct about security offerings?

• A) One of the costs of an IPO is the abnormal return.
• B) The underwriting spread tends to be a constant percentage regardless of the offering size.
• C) The costs of selling equity are less than the costs of selling debt.
• D) The Green Shoe option covers overallotments at the market price.
• E) There are economies of scale in both equity and bond offerings.

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Definitions:

Notes Payable

Written agreements where the borrower promises to pay back a specified sum of money plus interest to the lender at a future date.

Cash Flow

The total amount of money being transferred into and out of a business, affecting its liquidity and overall financial health.

Financing Activities

Actions leading to alterations in the size and composition of a company's equity capital or debt.

Cash Flow

The total amount of money being transferred into and out of a business, especially as affecting liquidity.