Which of the Following Statements About Stock-Issuing Firms Is FALSE

question 8

Multiple Choice

Which of the following statements about stock-issuing firms is FALSE?

• A) Firms that issue stock for the first time do so through an initial public offering, handled by an investment bank.
• B) Firms that pay dividends cannot lose money for their investors because the stockholders can at least count on the dividend payment every year.
• C) Firms that issue new stock a second time are making a secondary public offering.
• D) Firms that issue stock are participating in the equity credit channel.

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Definitions:

Personal Equipment

Tangible items owned by an individual for personal use, not for business or commercial purposes.

Cash

Currency and other liquid instruments such as checks and bank deposits that are readily available for use in transactions and other immediate needs.

Normal Credit Balance

The expected balance type for certain accounts in the general ledger, such as liabilities, equity, and revenue accounts.

Revenue

The income a company generates from its business activities, typically from the sale of goods and services to customers.