A Disadvantage of a Private Placement as a Source of Additional

question 53

Multiple Choice

A disadvantage of a private placement as a source of additional equity is:

• A)it is slow relative to a rights issue
• B)it dilutes the proportionate claims of existing shareholders
• C)the price per share is usually less than the subscription price in a rights issue
• D)the placement can be made to an investor who supports the current management
• E)tt is more expensive than a rights issue.

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Definitions:

Schachter-Singer

Two psychologists who proposed a theory of emotion, suggesting that physiological arousal is interpreted in the context of environmental cues to produce emotional experience.

Two-Factor Theory

A theory proposed by Herzberg that explains job satisfaction and motivation by categorizing workplace factors into hygiene factors and motivators.

Cognitive

Relating to mental processes such as perception, memory, thinking, and problem-solving.

Bisexual

Pertaining to a sexual orientation that involves attraction to both males and females.