A Sale by IBM of New Stock to the Public

question 11

Multiple Choice

A sale by IBM of new stock to the public would be a(n)

• A) short sale.
• B) seasoned equity offering.
• C) private placement.
• D) secondary-market transaction.
• E) initial public offering.

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Definitions:

Retained Earnings

The portion of a company's profit that is held back and not distributed to shareholders as dividends, used for investment or paying off debt.

Straight-Line Depreciation

A depreciation technique that allocates an equal amount of depreciation each year over the asset's useful life.

Residual Value

The estimated amount that an asset is expected to sell for at the end of its useful life, subtracting any disposal costs.