Which of the Following Statements Is FALSE

question 27

Multiple Choice

Which of the following statements is FALSE?

• A)The process of selling shares to the public for the first time is called a seasoned equity offering.
• B)The two advantages of going public are greater liquidity and better access to capital.
• C)Public companies typically have access to much larger amounts of capital through the public markets.
• D)By going public, companies give their private equity investors the ability to diversify.

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Definitions:

Common Stock

A type of equity security that represents ownership in a corporation, giving holders the right to vote on corporate matters and receive dividends.

Par Value

The nominal or face value of a bond, share of stock, or other security, typically set at the time it is issued.

Fair Value

An estimate of the market value of an asset or liability, reflecting what a willing buyer would pay a willing seller in an arm's length transaction.

Stock Issuance Costs

Expenses associated with the issuing of new shares of stock, including legal, accounting, and underwriting fees.