Second Stage Financing

question 25

Multiple Choice

Second stage financing:

• A) involves a substantial increase in leverage.
• B) immediately follows first-stage financing for every new business.
• C) may involve issuing additional shares of stock.
• D) occurs when the company is in danger of bankruptcy.

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Definitions:

Promissory Note

A written and legally binding promise to pay a specific sum of money to a designated party at a specified time or on demand.

Endorsed

The act of signing one's name on the back of a document, typically a financial instrument, indicating approval or transfer of rights.

Negotiable Instrument

A written document guaranteeing the payment of a specific amount of money either on demand or at a set time, with the payee’s name mentioned on it.

Fraud in the Factum

A deception made during the act of signing a document, where the signer is misled about the nature of the document and what signing it entails.