When Starting Dot

question 169

Multiple Choice

When starting dot.com businesses,such as Amazon.com,many of the owners have done all of the following except

• A)convinced venture capitalists and stock market investors that they will make a profit in the long run.
• B)turned profits in a relatively short time after the company was started.
• C)become instant millionaires.
• D)seen their company's stock price skyrocket.
• E)incurred huge losses since the company was created.

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Definitions:

Standby Underwriting Agreement

This is a commitment by an underwriter to purchase any unsold shares in a public offering, ensuring the issuing company raises the full amount of capital sought.

Lockup Agreement

A contractual clause preventing company insiders, such as employees and investors, from selling their shares for a certain period following an initial public offering (IPO).

Underwriting Contract

An agreement between an underwriter and an issuer of securities, in which the underwriter agrees to buy and subsequently resell the issue of securities.

IPO

Initial Public Offering, the process through which a private company offers shares to the public for the first time to raise capital.