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:

Capital Stock

The total amount of shares that a company can issue as authorized by its corporate charter, representing ownership in the company.

Redeemed Stock

Shares that have been bought back or repaid by the issuing company.

Financial Leverage

Financial leverage is the use of borrowed funds to increase the potential return of an investment, magnifying both potential gains and potential losses.