Which of the Following Statements Concerning Common Stock and the Investment

question 12

Multiple Choice

Which of the following statements concerning common stock and the investment banking process is NOT CORRECT?

• A) if a firm sells 1,000,000 new shares of class b stock, the transaction occurs in the primary market.
• B) listing a large firm's stock is often considered to be beneficial to stockholders because the increases in liquidity and reputation probably outweigh the additional costs to the firm.
• C) stockholders have the right to elect the firm's directors, who in turn select the officers who manage the business. if stockholders are dissatisfied with management's performance, an outside group may ask the stockholders to vote for it in an effort to take control of the business. this action is called a tender offer.
• D) the announcement of a large issue of new stock could cause the stock price to fall. this loss is called "market pressure," and it is treated as a flotation cost because it is a cost to stockholders that is associated with the new issue.
• E) the preemptive right gives each existing common stockholder the right to purchase his or her proportionate share of a new stock issue.

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Definitions:

Last Moment

A point in time immediately before a deadline or significant event, often associated with high stress or urgency.

Transferring

The act of moving risks or responsibilities from one party to another, often used as a risk management strategy.

Subtotaling Costs

The process of calculating intermediate total costs at various stages or for specific categories within a larger project or budget analysis.

Reconciliation

The process of ensuring that two sets of records (usually the balances of two accounts) are in agreement, often as a part of financial audits.