Test bank fundamentals of corporate finance 9th edition chap015

Chapter 15 - Raising Capital Chapter 15 Raising Capital Multiple Choice Questions Jones & Co is funded by a group of individual investors for the sole purpose of providing funding for individuals who are trying to convert their new ideas into viable products What is this type of funding called? A green shoe funding B tombstone underwriting C venture capital D red herring funding E life cycle capital What is the form called that is filed with the SEC and discloses the material information on a securities issuer when that issuer offers new securities to the general public? A prospectus B red herring C indenture D public disclosure statement E registration statement Miller & Chase is offering $4 million of new securities to the general public Which SEC regulation governs this offering? A Regulation A B Regulation C C Regulation G D Regulation Q E Regulation R 15-1 Chapter 15 - Raising Capital What is a prospectus? A a letter issued by the SEC authorizing a new issue of securities B a report stating that the SEC recommends a new security to investors C a letter issued by the SEC that outlines the changes required for a registration statement to be approved D a document that describes the details of a proposed security offering along with relevant information about the issuer E an advertisement in a financial newspaper that describes a security offering Which one of the following is a preliminary prospectus? A tombstone B green shoe C registration statement D rights offer E red herring Advertisements in a financial newspaper announcing a public offering of securities, along with a list of the investment banks handling the offering, are called: A red herrings B tombstones C Green Shoes D registration statements E cash offers What is an issue of securities that is offered for sale to the general public on a direct cash basis called? A best efforts underwriting B firm commitment underwriting C general cash offer D rights offer E herring offer 15-2 Chapter 15 - Raising Capital Tony currently owns 12,000 shares of GL Tools He has just been notified that the firm is issuing additional shares of stock and that he is being given a chance to purchase some of these shares prior to the shares being offered to the general public What is this type of an offer called? A best efforts offer B firm commitment offer C general cash offer D rights offer E priority offer Soup Galore is a partnership that was formed three years ago for the purpose of creating, producing, and distributing healthy soups in a dried form The firm has been extremely successful thus far and has decided to incorporate and offer shares of stock to the general public What is this type of an equity offering called? A venture capital offering B shelf offering C private placement D seasoned equity offering E initial public offering 10 What is a seasoned equity offering? A an offering of shares by shareholders for repurchase by the issuer B shares of stock that have been recommended for purchase by the SEC C equity securities held by a firm's founder that are being offered for sale to the general public D sale of newly issued equity shares by a firm that is currently publicly owned E a set number of equity shares that are issued and offered to the public annually 11 Executive Tours has decided to take its firm public and has hired an investment firm to handle this offering The investment firm is serving as a(n): A aftermarket specialist B venture capitalist C underwriter D seasoned writer E primary investor 15-3 Chapter 15 - Raising Capital 12 What is the definition of a syndicate? A a venture capitalist B a group of attorneys providing services for an IPO C block of investors who control a firm D a bank that loans funds to finance the start-up of a new firm E a group of underwriters sharing the risk of selling a new issue of securities 13 The difference between the underwriters' cost of buying shares in a firm commitment and the offering price of those securities to the public is called the: A gross spread B under price amount C filing fee D new issue premium E offer price 14 D.L Jones & Co recently went public The firm received $20.80 a share on the entire offer of 25,000 shares Keeser & Co served as the underwriter and sold 23,700 shares to the public at an offer price of $22 a share What type of underwriting was this? A best efforts B shelf C over subscribed D private placement E firm commitment 15 Blue Stone Builders recently offered to sell 45,000 newly issued shares of stock to the public The underwriters charged a fee of percent and paid Blue Stone Builders $16.40 a share on 40,000 shares Which one of the following terms best describes this underwriting? A best efforts B shelf C direct rights D private placement E firm commitment 15-4 Chapter 15 - Raising Capital 16 The 40-day period following an IPO during which the SEC places restrictions on the public communications of the issuer is known as the _ period A silent B quiet C lockup D green E red 17 Denver Liquid Wholesalers recently offered 50,000 new shares of stock for sale The underwriters sold a total of 53,000 shares to the public The additional 3,000 shares were purchased in accordance with which one of the following? A Green shoe provision B Red herring provision C quiet provision D lockup agreement E post-issue agreement 18 Shares of PLS United have been selling with rights attached Tomorrow, the stock will sell independent of these rights Which one of the following terms applies to tomorrow in relation to this stock? A pre-issue date B aftermarket date C declaration date D holder-of-record date E ex-rights date 19 The date on which a shareholder is officially listed as the recipient of stock rights is called the: A issue date B offer date C declaration date D holder-of-record date E ex-rights date 15-5 Chapter 15 - Raising Capital 20 A rights offering in which an underwriting syndicate agrees to purchase the unsubscribed portion of an issue is called a _ underwriting A standby B best efforts C firm commitment D direct fee E tombstone 21 The amount paid to an underwriter who participates in a standby underwriting agreement is called a(n): A gross spread B optional spread C standby fee D additional fee E oversubscription fee 22 Franklin Minerals recently had a rights offering of 1,000 shares at an offer price of $10 a share Isabelle is a shareholder who exercised her rights option by buying all of the rights to which she was entitled based on the number of shares she owns Currently, there are six shareholders who have opted not to participate in the rights offering Isabelle would like to purchase the unsubscribed shares Which one of the following will allow her to so? A standby provision B oversubscription privilege C open offer privilege D new issues provision E overallotment provision 23 Roy owns 200 shares of R.T.F., Inc He has opted not to participate in the current rights offering by this firm As a result, Roy will most likely be subject to: A an oversubscription cost B underpricing C dilution D the Green Shoe provision E a locked in period 15-6 Chapter 15 - Raising Capital 24 Direct business loans typically ranging from one to five years are called: A private placements B debt SEOs C notes payable D debt IPOs E term loans 25 A group of five private investors recently loaned $6 million to Henderson Hardware for ten years at percent interest This loan is best described as a: A private placement B debt SEO C notes payable D debt IPO E term loan 26 Pearson Electric recently registered 250,000 shares of stock under SEC Rule 415 The firm plans to sell 150,000 shares this year and the remaining 100,000 shares next year What type of registration was this? A standby registration B shelf registration C Regulation A registration D Regulation Q registration E private placement registration 27 Suzie is a chemist who has been experimenting with fragrances in her home laboratory and feels that she now has three viable perfumes that could be successfully marketed She knows a venture capitalist who has offered to finance her business to the point where she would be ready to begin the manufacturing and marketing stage Which type of financing is Suzie being offered? A syndicate B introduction C second-stage D mezzanine-level E seed money 15-7 Chapter 15 - Raising Capital 28 Which one of the following is probably the most successful means of finding venture capital? A internet searches B Dutch auctions C newspaper advertisements D personal contacts E personal letters to venture capital firms 29 Which one of the following statements concerning venture capital financing is correct? A Venture capitalists desire shares of common stock but avoid preferred stock B Venture capital is relatively easy to obtain C Venture capitalists rarely assume active roles in the management of the financed firm D Venture capitalists often require at least a forty percent equity position as a condition of financing E Venture capital is relatively inexpensive in today's competitive markets 30 Which one of the following statements concerning venture capitalists is correct? A Venture capitalists assume management responsibility for the firms they finance B Exit strategy is a key consideration when selecting a venture capitalist C Venture capitalists limit their services to providing money to start-up firms D Most venture capitalists are long-term investors in a firm E A venture capitalist normally invests in a new idea and finances that idea until the newlyformed firm can issue an IPO 31 Which of the following should be considered when selecting a venture capitalist? I level of involvement II past experiences III termination of funding IV financial strength A I and III only B II and IV only C I, III, and IV only D I, II, and IV only E I, II, III, and IV 15-8 Chapter 15 - Raising Capital 32 Trevor is the CEO of Harvest Foods, which is a privately-held corporation What is the first step he must take if he wishes to take Harvest Foods public? A select an underwriter B obtain SEC approval C gain board approval D prepare a registration statement E distribute a prospectus 33 All new interstate security issues are regulated by the: A registration statement B Green Shoe provision C Securities Exchange Act of 1934 D Securities Act of 1933 E Federal Reserve Act of 1931 34 The Securities and Exchange Commission: A verifies the accuracy of the information contained in the prospectus B verifies the accuracy of the information contained in the red herring C examines the registration statement during the Green Shoe period D is concerned only that an issue complies with all rules and regulations E determines the final offer price once they have approved the registration statement 35 Underwriters generally: A pay a spread to the issuing firm B provide only best efforts underwriting in the U.S C receive less compensation under a competitive agreement than under a negotiated agreement D market and distribute an entire issue of new securities within their own firm E pass the risk of unsold shares back to the issuing firm via a firm commitment agreement 15-9 Chapter 15 - Raising Capital 36 With firm commitment underwriting, the issuing firm: A is unsure of the total amount of funds it will receive until after the offering is completed B is unsure of the number of shares it will actually issue until after the offering is completed C knows exactly how many shares will be purchased by the general public during the offer period D retains the financial risk associated with unsold shares E knows up-front the amount of money it will receive from the stock offering 37 With Dutch auction underwriting: A each winning bidder pays the price he or she bid B all successful bidders pay the same price C all bidders receive at least a portion of the quantity for which they bid D the selling firm receives the maximum possible price for each security sold E the bidder for the largest quantity receives the first allocation of securities 38 If an IPO is underpriced then the: A investors in the IPO are generally unhappy with the underwriters B issue is less likely to sell out C stock price will generally decline on the first day of trading D issuing firm is guaranteed to be successful in the long term E issuing firm receives less money than it probably should have 39 Which of the following have been offered as supporting arguments in favor of IPO underpricing? I Underpricing counteracts the "winner's curse" II Underpricing rewards institutional investors for sharing their opinions of a stock's market value III Underpricing diminishes the underwriting risk of a firm commitment underwriting IV Underpricing reduces the probability that investors will sue the underwriters A I and III only B II and IV only C I and II only D I, II, and III only E I, II, III, and IV 15-10 Chapter 15 - Raising Capital 75 Birds and More is considering a project which requires the purchase of $164,000 of fixed assets The net present value of the project is $4,500 Equity shares will be issued as the sole means of financing this project The price-earnings ratio of the project equals that of the existing firm What will the new market value per share be after the project is implemented given the following current information on the firm? A $20.68 B $20.72 C $20.80 D $20.95 E $21.10 Current market value per share = $457,600/22,000 = $20.80 Number of new shares needed = $164,000/$20.80 = 7,884.62 shares New market value per share = ($457,600 + $164,000 + $4,500)/(22,000 + 7,884.62) = $20.95 AACSB: Analytic Bloom's: Application Difficulty: Intermediate Learning Objective: 15-3 Section: 15.9 Topic: Market value 15-69 Chapter 15 - Raising Capital 76 Wagner Trucking is considering investing in a new project that will cost $13 million and increase net income by 6.5 percent This project will be completely funded by issuing new equity shares Currently, the firm has 1.25 million shares of stock outstanding with a market price of $42 per share The current earnings per share are $1.82 What will the earnings per share be if the project is implemented? A $1.39 B $1.45 C $1.55 D $1.62 E $1.69 New earnings per share = ($1.82  1.25m  1.065)/[1.25m + ($13m/$42)] = $1.55 AACSB: Analytic Bloom's: Application Difficulty: Basic Learning Objective: 15-3 Section: 15.9 Topic: Earnings per share 77 You own 15 percent or 13,500 shares of Printers, Etc These shares have a total market value of $426,600 By what percentage will the total value of your investment in this firm change if the company sells an additional 10,000 shares of stock at $30 a share and you not buy any? A -1.37 percent B -1.21 percent C -0.51 percent D 1.03 percent E 1.29 percent Current number of shares outstanding = 13,500/0.15 = 90,000 Price per share = $426,600/13,500 = $31.60 New market value per share = [(90,000  $31.60) + (10,000  $30)]/(90,000 + 10,000) = $31.44 Percent change = ($31.44 - $31.60)/$31.60 = -0.51 percent AACSB: Analytic Bloom's: Application Difficulty: Intermediate Learning Objective: 15-3 Section: 15.9 Topic: Dilution 15-70 Chapter 15 - Raising Capital 78 Kurt currently owns 3.4 percent of Northeastern Transportation The company has a total of 438,000 shares outstanding with a current market price of $26.20 a share At present, the firm is offering an additional 25,000 shares at a price of $25 a share Kurt decides not to participate in this offering What will his ownership position be after the offering is completed? A 3.06 percent B 3.22 percent C 3.27 percent D 3.40 percent E 3.51 percent Number of shares owned = 0.034  438,000 = 14,892 New ownership position = 14,892/(438,000 + 25,000) = 3.22 percent AACSB: Analytic Bloom's: Application Difficulty: Basic Learning Objective: 15-3 Section: 15.9 Topic: Dilution Essay Questions 79 It can be argued that the decision to accept venture capital is one of the most critical decisions an entrepreneur must make Explain why The potential rewards from venture capital can be substantial but the costs to the entrepreneur are equally substantial The primary advantage of venture capital funding is the access to capital when funds are unavailable from other sources In addition, a venture capitalist provides industry experience, expertise, and valuable business contacts However, nothing is free In exchange for this funding, entrepreneurs have to sacrifice a large percentage of their ownership rights to the venture capitalist If venture capital is not accepted, the firm may fail for lacking of funding If venture capital is accepted, there's no guarantee of success; only a guarantee that the entrepreneur will own less of the firm AACSB: Reflective thinking Bloom's: Analysis Difficulty: Basic Learning Objective: 15-1 Section: 15.1 Topic: Venture capital 15-71 Chapter 15 - Raising Capital 80 Explain both a rights offering and the basic characteristics of a right A rights offering is an issue of common stock that is initially offered for sale to a firm's current shareholders Shareholders generally receive one right for each share of stock owned Each right grants its holder the ability to purchase a stated amount of new shares at a stated price during a stated period of time If the recipient of a right decides not to participate in the rights offering, then he or she can sell that right to another investor who does want to participate Selling stock via a rights offering is generally a cheaper method of issuing securities than a general cash offer AACSB: Reflective thinking Bloom's: Comprehension Difficulty: Basic Learning Objective: 15-4 Section: 15.8 Topic: Rights offer 81 Explain why there is a tendency for IPOs to be underpriced Several reasons have been given for underpricing an IPO These include: determining the correct offering price is extremely difficult, underpricing helps ensure the success of the security offering, underpricing is just an indirect cost of a securities issue, underpricing rewards IPO investors for purchasing risky securities, underpricing addresses the issue of the "winner's curse", and underpricing rewards institutional investors for the information they provide to underwriters regarding the potential interest in and value of a security issue AACSB: Reflective thinking Bloom's: Comprehension Difficulty: Basic Learning Objective: 15-3 Section: 15.5 Topic: IPO underpricing 15-72 Chapter 15 - Raising Capital 82 Firms encounter several costs when issuing new securities Identify and describe at least four of these costs Students should provide a partial discussion of the information found at the beginning of SECTION 15.7 where different types of costs are identified and defined These are: AACSB: Reflective thinking Bloom's: Knowledge Difficulty: Basic Learning Objective: 15-3 Section: 15.7 Topic: Underwriting costs 15-73 Chapter 15 - Raising Capital 83 Steve is the founder of Jefferson & Westover Recently, the firm decided to issue an IPO with Steve retaining 30 percent ownership of the firm The IPO agreement contained both a Green Shoe provision and a 6-month lockup agreement Steve's cost basis per share is $15 The offering price for the IPO was $16 On the first day of trading, the market price per share rose to $28.20 and closed for the day at $25.60 Now, six months after the IPO release, the stock is valued at $15.40 a share Explain who benefited the most during the lockup period, an outside investor or Steve, and why As a company insider, the lockup agreement has prevented Steve from selling any of his shares and benefiting from the substantial price increase to $28.20 a share Thus, Steve still owns all of his shares and has a current profit of $0.40 a share Meanwhile, Outside Investor A could have purchased shares for $16 and sold them at $28.20 each Outside Investor B, could have bought the shares at $28.20 and suffered a loss since the shares have declined in value since that point Thus, who is better off depends upon the price at which the outside investor purchased shares AACSB: Reflective thinking Bloom's: Analysis Difficulty: Intermediate Learning Objective: 15-3 Section: 15.4 Topic: Lockup agreement Multiple Choice Questions 15-74 Chapter 15 - Raising Capital 84 The Timken Company has announced a rights offer to raise $25 million for a new journal, the Journal of Financial Excess This journal will review potential articles after the author pays a nonrefundable reviewing fee of $2,500 per page The stock currently sells for $48 per share, and there are 2.6 million shares outstanding The subscription price is set at $43 per share What is the ex-rights price per share? A $45.58 B $47.09 C $48.15 D $48.80 E $49.42 Number of new shares = $25m/$43 = 581,395.35 Number of rights needed to buy one share = 2.6m/581,395.35 = 4.472 Ex-rights price per share = [$43 + 4.472($48)]/[1 + 4.472] = $47.09 AACSB: Analytic Bloom's: Application Difficulty: Basic EOC #: 15-2 Learning Objective: 15-4 Section: 15.8 Topic: Rights offer 15-75 Chapter 15 - Raising Capital 85 The Warm Shoe Co has concluded that additional equity financing will be needed to expand operations and that the needed funds will be best obtained through a rights offering It has correctly determined that as a result of the rights offering, the share price will fall from $100 to $95 ($100 is the rights-on-price; $95 is the ex-rights price, also known as the whenissued price) The company is seeking $18 million in additional funds with a per-share subscription price of $50 How many shares of stock are outstanding, before the offering? (Assume that the increment to the market value of the equity equals the gross proceeds of the offering.) A 324,000 B 360,000 C 1,800,000 D 3,240,000 E 3,600,000 PEx = $95 = ($50 + $100N)/(N + 1); N = Number of new shares = $18m/$50 = 360,000 shares Number of old shares =  360,000 = 3,240,000 shares AACSB: Analytic Bloom's: Analysis Difficulty: Basic EOC #: 15-3 Learning Objective: 15-4 Section: 15.8 Topic: Rights offer 15-76 Chapter 15 - Raising Capital 86 The Woods Co and the Mickelson Co have both announced IPOs at $43 per share One of these is undervalued by $20, and the over is overvalued by $14, but you have no way of knowing which is which You plan on buying 1,000 shares of each issue If an issue is underpriced, it will be rationed, and only half your order will be filled What is the amount of the difference between your expected profit and the amount of profit you could earn if you could get 1,000 shares of Woods and 1,000 shares of Mickelson? A -$10,000 B -$6,000 C -$4,000 D $4,000 E $6,000 Expected profit = 500($20) + 1,000(-$14) = -$4,000 Profit if 1,000 shares of each = 1,000($20) + 1,000(-$14) = $6,000 Difference = -$4,000 - $6,000 = -$10,000 AACSB: Analytic Bloom's: Application Difficulty: Basic EOC #: 15-4 Learning Objective: 15-3 Section: 15.5 Topic: IPO underpricing 87 Flagler, Inc needs to raise $30 million to finance its expansion into new markets The company will sell new shares of equity via a general cash offering to raise the needed funds The offer price is $30 per share and the company's underwriters charge a 10 percent spread How many shares need to be sold? A 1,111,111 shares B 1,250,000 shares C 1,666,667 shares D 2,500,000 shares E 3,333,333 shares Required sales proceeds: $30m = x (1 - 0.10); x = $33,333,333 Number of shares needed = $33,333,333/$30 = 1,111,111 AACSB: Analytic Bloom's: Application Difficulty: Basic EOC #: 15-5 Learning Objective: 15-3 Section: 15.7 Topic: Flotation costs 15-77 Chapter 15 - Raising Capital 88 The Educated Horses Corporation needs to raise $20 million to finance its expansion into new markets The company will sell new shares of equity via a general cash offering to raise the needed funds Suppose the offer price is $40 per share and the company's underwriters charge an percent spread The SEC filing fee and associated administrative expenses of the offering are $660,000 How many shares need to be sold? A 448,907 B 461,222 C 511,111 D 529,937 E 561,413 Required sales proceeds: $20m + $0.66m = x (1 - 0.08); x = $22,456,522 Number of shares needed = $22,456,522/$40 = 561,413 AACSB: Analytic Bloom's: Application Difficulty: Basic EOC #: 15-6 Learning Objective: 15-3 Section: 15.7 Topic: Flotation costs 15-78 Chapter 15 - Raising Capital 89 The Huff Co has just gone public Under a firm commitment agreement, Huff received $21.50 for each of the million shares sold The initial offering price was $23.65 per share, and the stock rose to $30.51 per share in the first few minutes of trading Huff paid $1,260,000 in direct legal and other costs, and $390,000 in indirect costs The flotation costs were what percentage of the funds raised? A 38.56 percent B 40.32 percent C 41.68 percent D 43.75 percent E 44.09 percent Net amount raised = 6m ($21.50) - $1,260,000 - $390,000 = $127,350,000 Total direct costs = $1,260,000 + ($23.65 - $21.50) (6m) = $14,160,000 Total indirect costs = $390,000 = ($30.51 - $23.65) (6m) = $41,550,000 Total costs = $14,160,000 + $41,550,000 = $55,710,000 Flotation cost percentage = $55,710,000/$127,350,000 = 43.75 percent AACSB: Analytic Bloom's: Application Difficulty: Basic EOC #: 15-7 Learning Objective: 15-3 Section: 15.7 Topic: Flotation costs 15-79 Chapter 15 - Raising Capital 90 Mountain Homes wishes to expand its facilities The company currently has million shares outstanding and no debt The stock sells for $55 per share, but the book value per share is $43 The firm's net income is currently $9.1 million The new facility will cost $30 million, and it will increase net income by $309,000 Assume the firm issues new equity to fund this expansion while maintaining a constant price-earnings ratio What will be the EPS be after the new equity issue? A $1.25 B $1.30 C $1.35 D $1.40 E $1.45 Number of shares after the offering = 7m + ($30m/$55) = 7,545,454.545455 New EPS = ($9.1m + $309,000)/7,545,454.545455 = $1.25 AACSB: Analytic Bloom's: Analysis Difficulty: Intermediate EOC #: 15-9 Learning Objective: 15-3 Section: 15.9 Topic: Dilution 15-80 Chapter 15 - Raising Capital 91 The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations Some recent financial information for the company is shown here: MHMM is considering an investment that has the same P/E ratio as the firm The cost of the investment is $798,270, and it will be financed with a new equity issue What would the ROE on the investment have to be if we wanted the price after the offering to be $110 per share? Assume the PE ratio remains constant A 18.28 percent B 21.41 percent C 27.63 percent D 37.27 percent E 40.03 percent Current ROE = $451,000/($4,631,000 - $2,315,500) = 0.19477435 New net income = 0.19477435 ($4,631,000 - $2,315,500 + $798,270) = $606,483 Number of new shares = $798,270/$110 = 7,257 New EPS = $606,483/(11,000 + 7,257) =$33.22 Current P/E = $110/($451,000/11,000) = 2.6829 Necessary EPS = $110 = 2.6829(Necessary EPS); Necessary EPS = $41 Necessary net income = $41 (7,257) = $297,537 New ROE = $297,537/$798,270 = 37.27 percent AACSB: Analytic Bloom's: Analysis Difficulty: Intermediate EOC #: 15-11 Learning Objective: 15-3 Section: 15.9 Topic: Dilution 15-81 Chapter 15 - Raising Capital 92 Precise Machining is considering a rights offer The company has determined that the exrights price would be $46 The current price is $53 per share, and there are million shares outstanding The rights offer would raise a total of $70 million What is the subscription price? A $26.48 B $27.06 C $27.50 D $28.18 E $29.10 Number of new shares = $70m/PS NEx = 7m/($70m/PS) = 0.1PS PX = $46 = [0.1PS($53) + PS]/(0.1PS + 1); PS = $27.06 AACSB: Analytic Bloom's: Application Difficulty: Intermediate EOC #: 15-12 Learning Objective: 15-4 Section: 15.8 Topic: Rights offer 15-82 Chapter 15 - Raising Capital 93 Atlas Corp wants to raise $4 million via a rights offering The company currently has 450,000 shares of common stock outstanding that sell for $40 per share Its underwriter has set a subscription price of $26 per share and will charge the company a percent spread Assume that you currently own 7,200 shares of stock in the company and decide not to participate in the rights offering How much can you get for selling all of your rights? A $24,911.21 B $25,362.84 C $25,792.19 D $26,414.14 E $27,094.95 Net proceeds to firm = $26 (1 - 0.07) = $24.18 New shares offered = $4m/$24.18 = 165,425.97 Number of rights needed per share = 450,000/165,425.97 = 2.72025 PEx = [$26 + 2.72025($40)]/(1 + 2.72025) = $36.24 Right value = $40 - $36.24 = $3.76 Sale proceeds = $3.76 (7,200) = $27,094.95 AACSB: Analytic Bloom's: Analysis Difficulty: Intermediate EOC #: 15-14 Learning Objective: 15-4 Section: 15.8 Topic: Rights offer 15-83 ... financial newspaper announcing a public offering of securities, along with a list of the investment banks handling the offering, are called: A red herrings B tombstones C Green Shoes D registration... a group of attorneys providing services for an IPO C block of investors who control a firm D a bank that loans funds to finance the start-up of a new firm E a group of underwriters sharing the