Space Trips Inc

question 58

Multiple Choice

Space Trips Inc. files a registration statement with the SEC before making an offering to the general public. The registration contains false, immaterial statements of which the investors are unaware. The firm is charged with violating the Securities Act of 1933. Its best defense is​

• A) ​the investors were not aware of the misrepresentations.
• B) ​the issuer reasonably believed the misstatements were true.
• C) ​the offering was made available to the general public.
• D) ​the untrue statements were not material.

---

Definitions:

Cost Of Debt

The effective rate that a company pays on its total debt, indicating the average return that lenders demand for borrowing their capital.

Capital Structure

Capital structure refers to the mix of equity, debt, and other financing sources a company uses to fund its operations and growth.

Optimal Capital Structure

The best combination of debt, preferred, and equity financing that maximizes a company’s stock price by minimizing its cost of capital.

Capital Budget

The budget allocated for spending on major long-term investments or projects of a company.