Which Statement Concerning Common Stock and the Investment Banking Process

question 18

Multiple Choice

Which statement concerning common stock and the investment banking process is NOT true?

• A)The preemptive right gives each existing common stockholder the right to purchase his or her proportionate share of a new stock issue.
• B)If a firm sells 1,000,000 new shares of Class B stock, the transaction occurs in the primary market.
• C)Listing a large firm's stock is often considered to be beneficial to stockholders because the resulting increases in liquidity and reputation probably outweigh the additional costs to the firm.
• D)If stockholders are dissatisfied with management's performance, an outside group may ask the stockholders to vote for it in an effort to take control of the business. This action is called a tender offer.

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Definitions:

Recording Process

The act of documenting financial transactions systematically in the books of accounts of a business.

Journal

An elaborate log that captures every financial transaction of an enterprise, initially entered prior to its transfer to the accounts within the general ledger.

Ledger

A comprehensive collection of accounts that records all financial transactions of a business, serving as the principal book for accounting.

Trial Balance

An accounting report that lists the balances of all ledger accounts to ensure that debits equal credits, used for internal checks.