Equity Investments - Equity Investments Section 2

Avatto>>CFA Level 1>>PRACTICE QUESTIONS>>Equity Investments>>Equity Investments Section 2

16. Which of the following statements is least accurate?

  • Option : B
  • Explanation : Options A and C are correct. Option B is not true. Just because a share is putable or callable does not make it any easier to sell.
Cancel reply
Cancel reply

17. Which of the following is least likely a main reason for a company to raise capital by issuing equity securities?

  • Option : B
  • Explanation : A and C represent reasons for why a company might raise capital by issuing equity. It is unlikely that a company will finance working capital requirements by issuing equity.
Cancel reply
Cancel reply

18. A company issues equity on a primary market:

  • Option : A
  • Explanation : A company issues equity on a primary market to raise capital and increase liquidity.
Cancel reply
Cancel reply

19. Which of the following is a primary goal for a company to raise equity capital?

  • Option : C
  • Explanation : To finance revenue generating activities (organic growth).The capital is used to purchase long-term assets, invest in profit-generating projects, expand to new territories, or invest in research and development.
Cancel reply
Cancel reply