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3 Cards in this Set
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Explanations Multiple Choice Cap 2 |
The underwriter must purchase unsold shares in an underwritten offering. The underwriter has no obligations to purchase unsold shares in a best effort offering. More risky stock offering are done in a best effort basis. Best efforts offering do not provide the firm with greater assurance that all offered shares will be sold. A stock split does not involve any accounting entries. Instead a large number of new shares are issued to replace and retire all outstanding share. Stock Dividends are paid in additional shares of common stock. In stock splits all outstanding shares are replaced with a new issue of shares. In a stock split there is a large decline in the book value and in the market value per share. A stock dividend does not affect the par value of a stock. Only debt can be refunded. A sinking fund can be established for preferred stock. |
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