Financing the Corporation Self-Quiz








The primary reason that corporations issue securities is to:
Choice 1 obtain financing.
Choice 2 increase their market share.
Choice 3 reduce their production costs.
Choice 4 increase their visibility.
X is attempting to purchase B Corp. However, X does not have sufficient operating capital to complete the transaction. As such, X brings Y and Z on board as partners in the transaction. The group of X, Y, and Z together is referred to as:
Choice 1 an operating company.
Choice 2 an investment fund.
Choice 3 a syndicate.
Choice 4 a triumvirate.
Go Co needs a great deal of cash in order to complete an acquisition it is attempting. Given this situation, Go’s best method of raising funds, given its healthy balance sheet and strong history, is to:
Choice 1 purchase the company using operating cash flows.
Choice 2 sell assets to finance the deal.
Choice 3 seek out a bank loan to finance the operation.
Choice 4 prepare an issuance of securities.
Jump, Inc. would like to raise some funds and is, therefore, completing a public issuance of shares. Jump, however, has a somewhat rocky financial past and is worried about some of the effects of going public because one of the effects of a public issuance is:

Choice 1 greater financial turbulence inherent to a public company.
Choice 2 increased disclosure and transparency requirements.
Choice 3 a larger number of individuals will likely try to sell supplies to the company.
Choice 4 its creditors will want to buy a stake of the company in order to ensure they get paid.

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