Arguments to Explain Why Most Equity Issues Are Underwritten Versus

question 51

Multiple Choice

Arguments to explain why most equity issues are underwritten versus sold through a rights offering are:

• A)underwriters buy at an agreed upon price and bear some risk of selling the issue.
• B)cash proceeds are available sooner in underwriting and the issue is available to a wider market.
• C)investment bankers can provide market advice and certify the issue for potential investors.
• D)All of the above.
• E)None of the above.

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Definitions:

Cumulative Voting

A voting system that allows shareholders to concentrate their vote allocation among one or more candidates, enhancing minority shareholders' ability to elect a director.

Straight Voting

A corporate voting procedure in which shareholders may cast all votes for a single candidate for the board.

Cumulative Voting

A voting system that allows shareholders to allocate all their votes to one candidate or distribute them among several candidates, often used in corporate board elections to strengthen the voting power of minority shareholders.

Board of Directors

A group of individuals elected by shareholders to oversee the management and make important decisions for a corporation.