Moon Company Plans to Issue 10 Million Shares in a Seasoned

question 79

Multiple Choice

Moon Company plans to issue 10 million shares in a seasoned equity offering. The owner, Ken Moon, plans to sell 4 million shares as part of the offering. Which of the following is true regarding the seasoned equity issue?

• A) It is a primary offering.
• B) It is a secondary offering.
• C) Some shares are primary shares and some shares are secondary shares.
• D) None of the above is true regarding this seasoned equity offering.

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Definitions:

Prime Rate

The interest rate that commercial banks charge their most credit-worthy customers, often used as a reference rate for various loans.

Revolving Credit

A credit facility that allows a company or individual to borrow up to a pre-approved limit, pay it back, and borrow again.

Commitment Fee

A fee charged by a lender to a borrower for an unused credit line or undisbursed loan.

Commercial Paper

An unsecured, short-term debt instrument issued by corporations to finance their immediate operating expenses, inventory, and other short-term liabilities.