Equity Investments MCQ - Equity Investments Section 1

6 A German company listed on the Frankfurt Stock Exchange, announced the sale of 7,696,565 shares to a small group of qualified investors at EUR 0.075 per share. The sale can be best described as a(n):

This sale is a private placement. As the company is already registered, the share sale is not an initial public offering. The sale cannot be called as shelf registration because the company is not selling shares to the public in fragments.

7 A publicly traded company in UK gave its existing shareholders the opportunity to subscribe to new shares in order to raise new capital for business expansion. The existing shareholders could purchase two new shares at a subscription price of GBP 3.59 per share for every 25 shares held. This is an example of a(n):

This offering is a rights offering as the company is distributing rights to existing shareholders to buy stock at a fixed price in proportion to their current holdings.

8 An automobile manufacturing company announces that it plans to sell 10 million of its shares to the public. This transaction is most likely a sale in the:

This transaction is most likely to be a part of primary market. This is a direct sale of issuer to investor and fund flows to the issuer directly from the purchaser of the security.

9 The cost of raising capital in primary markets:

The cost of raising capital becomes low in primary markets when securities trade in liquid secondary markets.

10 An investor trading in foreign currencies most likely trades in a(n):

Almost all currency trading takes place in quote driven markets where trading is done through dealers at the prices quoted by them. They are also called as over-the-counter markets.