Poor Capital Structure Decisions Can Result in a High Cost

question 7

True/False

Poor capital structure decisions can result in a high cost of capital, thereby making some unacceptable investments acceptable.

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Definitions:

Private Placement Situation

A method of raising capital through the sale of securities to a relatively small number of select investors rather than through a public offering.

SEC

Securities and Exchange Commission, a U.S. government agency that oversees securities transactions, activities of financial professionals, and the stock and options exchanges.

Issuers

Entities that create and issue financial securities, such as stocks and bonds, to finance operations, expand their business, or undertake new projects.

Registration Statement

A set of documents, including a prospectus, filed with the Securities and Exchange Commission (SEC) for a company intending to go public.