Question 1 A foreign stock market that caters to small companies is:AnswerAIM.AMX.the NASDAQ.DPOX.2 points Question 2 Most companies that make Rule 5 offerings raise between $1 million and:Answer$50 million.$10 million.$5 million.$20 million.2 points Question 3 The “wait to go effective” is the time period when:Answerthe SEC registration statement is being prepared.the underwriter decides what regulation to file under.the firm prices the stock for the offering.the company is waiting for SEC approval after filing the registration statement.2 points Question 4 In a public offering, the underwriter:Answeradvises the owner as to the best structure of the business going into the sale.serves as an adviser and consultant to the small business in preparing the registration statement for the SEC.is bound to the offering until it is executed.is listed as one of the officers of the company.2 points Question 5 Regulation A is best suited when a company is at the ________ stage.Answerstartupearlyexpansionlater2 points Question 6 Which of the following is the most popular rule of Regulation D exemptions?Answer5015025035042 points Question 7 When filing with the SEC, the initial registration statement:Answerprohibits a “road show.”is filed without share price, proceeds, or commissions listed.signals the time to sign the formal underwriting agreement.is generally accepted without corrections by the SEC.2 points Question 8 The single most important ingredient in making a successful public offering is:Answerchoosing a capable underwriter.negotiating a favorable letter of intent.preparing a suitable registration statement.filing Regulation D with the SEC.2 points Question 9 The two factors that make a deal attractive to venture capitalists are:Answereffective marketing strategies and networking opportunities.high returns and a convenient (and profitable) exit strategy.high returns and networking opportunities.a convenient and (profitable) exit strategy and effective marketing strategies.2 points Question 10 The largest single source of external equity capital for small businesses is:Answerangels.venture capitalists.Small Business Administration loans.commercial bankers.2 points Question 11 When structuring a deal with an “angel,” an entrepreneur should remember that:Answer”angels” tend to prefer a controlling interest in the business.the deal needs an annual return of 60—75%.”angel” money is patient, often waiting seven or more years to cash out.they prefer to earn their returns through dividends and interest.2 points Question 12 Under a ________ agreement, the underwriter agrees to purchase all of the shares in a company’s public offering and then resells them to investors.Answerbest effortlock-upfinal pricefirm commitment2 points Question 13 When taking a company public, investment bankers look for:Answera leading position in a stable market.3 to 5 years of audited financial statements.a strong record of revenues.a moderate growth rate.2 points Question 14 The most common source of equity funds used to start a small business is:Answerprivate investors or “angels.”loans from commercial banks.the entrepreneur’s pool of personal savings.public stock issues.2 points Question 15 The largest cost in a public stock offering is:Answerprinting expenses.filing fees with the SEC.the underwriter’s commission.legal fees.
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