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FINANCIAL MARKETS AND INSTITUTIONS

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Question;(2-5) Ownership and;going public F H;[1]. Which of the following statements;is NOT CORRECT?;a. When a corporation's shares are owned by a few;individuals, we say that the firm is "closely, or privately, held.;b. "Going public" establishes a firm's;true intrinsic value and ensures that;a liquid market will always exist for the firm's shares.;c. The stock of publicly owned companies must generally be registered with and reported;to a regulatory agency such as the SEC.;d. When stock in a closely held corporation is;offered to the public for the first time, the transaction is called "going;public, or an IPO," and the market for such stock is called the new issue;or IPO market.;e. It is possible for a firm to go public and yet;not raise any additional new capital for the firm itself.;Multiple Choice: Problems;(2-6) Stock/index returns C H;[2]. You have the following data on three stocks;shown below. You decide to use the data;on these stocks to form an index, and you want to find the average earned rate;of return for 2011 on your index. If you;follow the averaging procedure used to calculate the S&P 500 Index return;what would your index's rate of return be?;Hints: Rates of return are based;on beginning-of-year prices, and the S&P Index is weighted by market values;of the companies in the index.;Shares;Beginning Ending Outstanding;Stock Dividend Price Price (millions);A $1.50 $30.00 $32.00 5.00;B $2.00 $28.50 $27.00 4.50;C $0.75 $20.00 $24.00 20.00;a. 16.07%;b. 16.92%;c. 17.76%;d. 18.65%;e. 19.59%

 

Paper#55052 | Written in 18-Jul-2015

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