Question

Multiple Choice- Select the best answer Question #2: Chapter 14 The true value of a security is: A. the value of that security at some future date. B. the sum of all future dividends. C. the amount that a fundamental analyst will pay. D. the price that incorporates all currently available information. Question #3: Chapter 14 What is the book value per share of equity for a firm with $1 million in net common equity, $50,000 in authorized share capital, 25,000 shares issued, and 20,000 shares outstanding? A. $38.00 B. $40.00 C. $47.50 D. $50.00 Question #4: Chapter 15 Money that is offered to finance a new business is known as: A. a general cash offer. B. venture capital. C. private placement. D. a rights issue. Question #5: Chapter 15 When a public company offers shares to the general public, it does so under a(n): A. rights issue. B. initial public offering C. shelf registration. D. general cash offer. Question #6: Chapter 15 What is the market value placed on a firm in which an entrepreneur invests $1 million and a venture capitalist invests $3 million in first-stage financing for a 50% interest in the firm? A. $4 million B. $6 million C. $7 million D. $8 million Question #7: Chapter 16 Part A. A firm is expected to generate $1.5 million in operating income and pay $250,000 in interest. Ignoring taxes, this will generate $12.50 earnings per share. What will happen to EPS if operating income increases to $2.0 million? A. EPS increase to $15.63. B. EPS increase to $16.67. C. EPS increase to $17.50. D. EPS increase to $20.00. Part B. A firm's capital structure is represented by its mix of: A. assets. B. liabilities and equity C. assets and liabilities D. assets, liabilities, and equity.

Answer 1

As per rules I am answering the first 4 subparts of the question

Q2: D

The true value of a security is the price that incorporates all available information.This shows the intrinsic value or the actual value of the stock. A is false since the value of a security at a future date may not be true value. It also need not be the sum of future dividends since the stock may not pay dividends at all. It also need not be the amount computed by an analyst as his expectations may differ.

Q3:D

Book value per share = Net Equity/ Shares outstanding

= 1000000/20000

=$50

Q4: B

Venture capital is the capital given to a new venture or business. Restof the options do not refer to initial cash given.

Q5: B

Initial public offer is when a company issues shares to the public. Rights issue is offered to existing shareholders. Shelf registration is a process followed before the IPO. general cash offer is a method of selling debt and equity issues.