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31) The textbook defines a “large” business as having assets in excess of A) $50 million. B) $150 million. C) $500 million. D) $1 billion. 32) Only “large” firms are able to sell __________ securities, with __________ yields than the securities the small and mid-size firms can sell. A) liquid; lower B) liquid; higher C) illiquid; lower D) illiquid; higher 33) Minimizing per-dollar distribution costs favors issuing bonds __________ for issue sizes above approximately __________. A) privately; $10,000,000 B) privately; $100,000,000 C) publicly; $10,000,000 D) publicly; $100,000,000 34) A “registration statement” is drawn up in the process of A) preparing a private placement. B) requesting the waiving of a restrictive covenant. C) underwriting publicly-sold securities. D) listing the collateral on a loan. 35) Do underwriters normally run any kind of risk? A) They risk being unable to sell the bonds they underwrite. B) They risk receiving a lower price than the commitment price to the bond issuer. C) They risk default on the bonds. D) No, their operations are generally risk-free. 36) What is the “underwriting spread?” A) the average percentage of the total bond issue handled by a member of an underwriting syndicate B) the difference between the price the underwriters receive and the price they pay the borrower C) the length of time the underwriter agrees to withhold the bonds from the primary market D) the number of financial institutions in the underwriting syndicate 37) Unlike private placements, publicly-sold securities lack A) any kind of statement of the financial condition of the borrower. B) a secondary market. C) a definite maturity date. D) restrictive covenants. 38) Under __________ a borrower gets advance approval from the SEC to issue securities up to a certain amount at an unspecified time in the future. A) advance registration B) pre-registration C) guaranteed registration D) shelf registration 39) An important difference between offering prospectus in a public bond issue and the offering memorandum in a private placement is A) all relevant factual information about the firm and its financing is required in the prospectus but not in the offering memorandum. B) evidence of due diligence is required in the offering memorandum but not in the prospectus. C) the prospectus may not contain any projections about the company’s future while an offering memorandum has no such restriction. D) There are no differences between these two documents. 40) Large companies with good credit ratings tend to rely on __________ for short-term financing. A) the commercial paper market B) private placements C) finance companies D) equity 41) Commercial paper has a minimum maturity of A) one day. B) seven days. C) 30 days. D) 270 days. 42) Commercial paper has a maximum maturity of A) one day. B) seven days. C) 30 days. D) 270 days. 43) The existence of a “bought deal” in public offerings of bonds came about as a result of A) shelf registration. B) a narrow underwriting spread. C) the need of investment banks to form syndicates before underwriting an issue. D) the need by underwriters to avoid as much risk as possible. 44) “Medium term notes” have a maturity ranging up to A) one year. B) two years. C) five years. D) ten years. 45) Underwriting spreads on equity issues are much __________ than on debt issues because stock prices are so __________ relative to bond prices. A) smaller; steady B) smaller; volatile C) larger; steady D) larger; volatile

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