Equity Investments - Equity Investments Section 1
- Option : B
- Explanation : 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.
- Option : A
- Explanation : 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.
- Option : B
- Explanation : 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:
- Option : A
- Explanation : 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):
- Option : B
- Explanation : 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.
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