Question

Question1

Which of the following best defines the term syndicate?

A.Financing for new, often high-risk ventures.

B.Direct business loans of, typically, one to five years.

C.Loans made by a group of banks or other institutions.

D.A group of underwriters formed to reduce the risk and help to sell an issue.

E.Underwriter sells as much of the issue as possible, but can return any unsold shares to the issuer without financial responsibility.

Question2

The sugar cookie compny just paid a dividend of $.45 a share. The stock has a market price of $21 and a beta of .88. The return on treasury bills id 4.2 percent and the market has a 11.8 percent rate of return. What is the cost of equity for the cookie company?

Answer 1

1. Syndicate will be defined as a group of underwriters who are combined together in order to reduce the risk and help them to sell an issue of company and these underwriting Syndicate will be combining together in order to sell the securities.

All the other options about Syndicate are false.

Correct answer will be option (D)