The Purpose of an Initial Public Offering Is to

question 104

Multiple Choice

The purpose of an initial public offering is to

• A)See if there is a demand for a company's new product.
• B)Change the membership of the board of directors.
• C)Borrow funds for investment and growth.
• D)Raise funds for investment and growth by selling shares of the company to the public.

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Definitions:

Matures

The point in time when a financial obligation, such as a bond or loan, reaches its due date and the principal amount must be repaid to investors or creditors.

Subordinated Debt

A type of loan ranked below other loans with respect to claims on assets or earnings in the event of a liquidation or bankruptcy.

Appreciation

An increase in the value of an asset over time, often due to changes in market demand or supply, inflation, or other economic factors.

Market Yield

The interest rate that investors demand for buying securities currently available in the market.