1) Maxwell Corp. is coming to the market with a new offering of 450,000 shares of stock at $22 to the public. Maxwell will receive $19 per share. The firm has one million shares outstanding and earnings of $6 million before recording the new issue. What is the amount of earnings per share after the stock issuance?
a)$2.79
b)$1.38
c)$3.21
d)$6.00
2) Under SEC Rule 415, shelf registration
a)requires that companies registering securities, file a detailed statement for ongoing SEC review and approval.
b)has been used more frequently for equity than debt issues.
c)has allowed smaller investment bankers to compete for more business.
d)allows a corporation to issue securities when market conditions are more advantageous than current conditions.
3) Which of the following is an advantage of going public?
a)The firm can more easily become active in mergers and acquisitions.
b)The company is owned by many entities/individuals, making it more diverse.
c)An erosion in value may take place after the initial offering.
d)There is low cost with going public.
4) Which of the following is NOT a characteristic of market stabilization?
a)It may last up to 30 days.
b)It may be difficult to achieve.
c)It is often illegal.
d)It can protect the underwriting syndicate as well as investors.
5) Which of the following is NOT true about IPOs?
a)They are good deals for investors who buy them at a public offering and then sell them quickly afterward.
b)They are very popular among companies because of the easy assess to money.
c)They are initially underpriced in every country where stocks are publicly traded.
d)They usually result in dilution of earnings per share.