Which One of the Following Best Describes an Initial Public

question 29

Multiple Choice

Which one of the following best describes an initial public offering?

• A)Shares held by a firm's founder
• B)Any newly issued shares offered to the general public
• C)Shares issued to the public on a cash basis
• D)The first sale of equity shares to the general public
• E)Any shares initially offered to a firm's existing shareholders

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Definitions:

Nominal rate

An interest rate or return quoted on an investment or loan, not adjusted for inflation or other factors.

Effective rate

The total compounded interest rate, expressed annually, that represents the actual financial cost of a loan or investment.

Compounded quarterly

Interest is recalculated every three months based on both the initial principal and previously earned interest, leading to exponential growth of an investment or debt.

Principal amount

The principal amount refers to the initial sum of money borrowed in a loan or invested, excluding any interest or additional fees.