IPO Quiz - Economics 12

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Christine

Community Contributor

Quizzes Created: 1 | Total Attempts: 65

Questions: 10 | Attempts: 65 | Updated: Jun 11, 2023

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Questions and Answers

1.

What is IPO?
- A.
  
  First sale of stock issued by a company to the public.
- B.
  
  Y = ax + b
- C.
  
  Internet Personality Offer
- D.
  
  Law stating that electrons flow from the anode to the cathode in electrolysis.
Correct Answer
A. First sale of stock issued by a company to the public.

Explanation
The correct answer is "First sale of stock issued by a company to the public." This is because an IPO, or Initial Public Offering, refers to the first time a company sells its stock to the public. It is a significant event for a company as it allows them to raise capital and become publicly traded on a stock exchange. The other options provided in the question are unrelated and do not accurately define an IPO.

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2.

IPOs are generally used by growing companies in need of ________.

Correct Answer
capital, money, cash, moolah

Explanation
IPOs (Initial Public Offerings) are generally used by growing companies in need of capital, money, cash, or moolah. This is because an IPO allows a company to raise funds by selling shares of its stock to the public for the first time. By going public, the company can attract investors and generate the necessary capital to finance its growth and expansion plans. This influx of funds can be used for various purposes such as research and development, marketing, acquisitions, or paying off debts.

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4
3.

The last step to releasing IPOs is to form an initial public offering team.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
The last step to releasing IPOs is not to form an initial public offering team. While forming an IPO team is an important step in the process, it is not the last step. After forming the team, there are several other steps involved in releasing IPOs, such as conducting due diligence, preparing the prospectus, pricing the shares, and marketing the offering to potential investors. Therefore, the statement is false.

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4.

Which one of the following is an advantage of IPOs?
- A.
  
  Information regarding the company is gathered, specifically including financial performance and expected future operations.
- B.
  
  Increased time and effort.
- C.
  
  Stock Fluctuation
- D.
  
  Raises cash budgets for company.
Correct Answer
D. Raises cash budgets for company.

Explanation
The advantage of IPOs is that it raises cash budgets for the company. This means that by going public and offering shares to the public, the company can generate a significant amount of capital that can be used for various purposes such as funding growth initiatives, expanding operations, paying off debt, or investing in research and development. This influx of funds can help the company achieve its strategic objectives and fuel its future growth.

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5.

Being forced to disclose business information is a disadvantage of IPOs.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
The statement is true because when a company goes public through an IPO (Initial Public Offering), it is required to disclose a significant amount of business information to the public. This includes financial data, strategic plans, and other sensitive information that was previously kept confidential. This can be a disadvantage for the company as it exposes them to increased scrutiny and competition, and may also result in the loss of competitive advantage or trade secrets.

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6.

In the second step of the IPO procedure, ________ is gathered about the company.

Correct Answer
info, information, details

Explanation
In the second step of the IPO procedure, information or details about the company are gathered. This step involves collecting relevant data and facts that are necessary for the initial public offering process. This information can include financial statements, market analysis, business plans, and any other relevant details that potential investors may need to make informed decisions about investing in the company.

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4
7.

IPOs can allow an individual to exit ownership partially or fully.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
IPOs, or Initial Public Offerings, provide individuals with the opportunity to sell their ownership stake in a company either partially or completely. This means that individuals can choose to sell a portion of their shares and retain some ownership, or they can sell all of their shares and completely exit their ownership position. Therefore, the statement that IPOs can allow an individual to exit ownership partially or fully is true.

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8.

What minimum percentage of shares must you own of a company in order to be considered the owner?
- A.
  
  50%
- B.
  
  45%
- C.
  
  51%
- D.
  
  63%
Correct Answer
C. 51%

Explanation
To be considered the owner of a company, one must have the majority stake and control over the decision-making process. Owning 51% of the shares ensures that the individual has the power to make significant decisions, such as appointing the board of directors and determining company policies. This majority ownership allows the individual to have the final say in crucial matters and effectively control the company's operations and direction. Therefore, owning a minimum of 51% of the shares is necessary to be considered the owner.

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9.

What does SEC stand for?
- A.
  
  Securities and Evaluation Committee
- B.
  
  Securities and Exchange Commission
- C.
  
  Stock and Exchange Commision
- D.
  
  Securities and Exchange Committee
Correct Answer
B. Securities and Exchange Commission

Explanation
The correct answer is Securities and Exchange Commission. The SEC is a government agency in the United States that is responsible for regulating and supervising the securities industry, including stock exchanges, securities brokers and dealers, investment advisors, and mutual funds. The SEC's main goal is to protect investors and maintain fair and efficient markets.

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10.

The use of IPOs truly began booming in the ________.

Correct Answer
1990s, 1990's,

Explanation
IPOs began booming in the 1990s. This decade saw a significant increase in Initial Public Offerings (IPOs) as companies sought to raise capital by going public. The dot-com boom in the late 1990s especially fueled the IPO frenzy, with many internet companies going public and experiencing massive stock price increases. This period was characterized by high investor demand for new and innovative companies, resulting in a surge in IPO activity.

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4

IPO Quiz - Economics 12

What is IPO?

IPOs are generally used by growing companies in need of ________.

The last step to releasing IPOs is to form an initial public offering team.

Which one of the following is an advantage of IPOs?

Being forced to disclose business information is a disadvantage of IPOs.

In the second step of the IPO procedure, ________ is gathered about the company.

IPOs can allow an individual to exit ownership partially or fully.

What minimum percentage of shares must you own of a company in order to be considered the owner?

What does SEC stand for?

The use of IPOs truly began booming in the ________.