#1
What does IPO stand for in finance?
Initial Public Offering
ExplanationProcess of offering shares to the public for the first time.
#2
Which of the following is a primary motive for a company to go public?
To raise capital for expansion
ExplanationAccess to a large pool of capital for growth.
#3
What is the main advantage of debt financing compared to equity financing?
Debt financing doesn't dilute ownership
ExplanationNo loss of ownership control with debt financing.
#4
What is a roadshow in the context of an IPO?
A presentation to potential investors
ExplanationTour to attract investor interest in the IPO.
#5
What is the lock-up period in an IPO?
A period during which shareholders are restricted from selling their shares
ExplanationPrevents early investor sell-offs post-IPO.
#6
What is underpricing in the context of an IPO?
Setting the IPO price too low
ExplanationIPO shares priced lower than market value.
#7
Which regulatory body in the United States oversees the process of going public?
SEC (Securities and Exchange Commission)
ExplanationEnsures compliance and investor protection.
#8
What is a 'quiet period' in the context of an IPO?
A period when the company is not allowed to disclose any information
ExplanationSilent period before IPO to prevent hype.
#9
Which of the following is a potential disadvantage of going public?
Loss of control and increased regulatory requirements
ExplanationReduced control and higher regulatory burden.
#10
Which of the following is NOT typically a requirement for a company to go public?
Being profitable for at least five years
ExplanationProfitability not always required for IPO.
#11
What is a 'green shoe option' in the context of an IPO?
An option allowing underwriters to sell additional shares to meet demand
ExplanationAllows additional share sale if demand high.