Which of the Following Statements Is Correct

question 25

Multiple Choice

Which of the following statements is correct?

• A) The SEC must approve the price at which a stock is to be offered to the public when a company "goes public."
• B) If a company's stock is listed,then it trades in the over-the-counter (OTC)market.
• C) If the "preemptive right" exists in a company's charter,then the holders of its Class A shares have the right to receive a specified amount of dividends before dividends can be paid on Class B shares.
• D) A "prospectus" is a document which describes a company and the securities it plans to offer,and the prospectus generally must be approved by the SEC before a public offering of new securities can be made.
• E) The decision to list a company's stock generally is more important to the company than the decision to go public,i.e. ,listing has a larger impact on the way the firm is operated than does going public.

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Definitions:

Monthly Interest Rate

The percentage of interest that is charged or earned on an amount of money over a month.

Variable Cost

Expenses that change in proportion to the amount of goods or services produced.

Net Present Value

An investment's difference between the present value of cash inflows and the present value of cash outflows over time.

Monthly Interest Rate

The interest rate applied on a monthly basis to loans or savings, affecting the amount of monthly interest payments or earnings.