1.

In a IPO process, price of the shares offered will be

- the result of a long process called bookbuilding
- decided only by the banks
- negotiated by the banks with the Market authorities
- finally decided by the selling shareholder only

2.
When the board of director of a listed company announces a capital increase why usually
the market reacts negatively and share price drop?
- because the market does not like surprises
- because the market is afraid of potential economic dilution
- because investors needs to reassess their own capital allocation
- because - given the lack of specific use of proceeds
- the expected profitability of the company will be revised downward

3.
During the execution of a right issues, the share price will drop again for technical reasons
when
- EGM approves the transaction
- Board approves terms and conditions of the transactions
- rights will start trading independently from the shares
- the subscription price is lower of the TERP

4.
Once the right issue is approved by the Market Authority, the transaction gets real. Shares
will start trading ex-rights. How would you define the rights?
- put options of the company to shareholders
- 3 weeks call options for holders to subscribe new shares at subscription price
- call options for the holders to subscribe new shares at TERP
- none of the above

5.
What is a rump ?
- capital commitment for the underwriters
- amount of unsubscribed shares at the end of the subscription period
- potential source of losses for the underwriters
- all of the above

6.
A firm's first offering of stock to the general public is known as:
-first-stage financing.
-an IPO.
-a general cash offer.
-a seasoned offering.

7.
A secondary offering IPO occurs when:

-new shares are sold to provide the company with additional funds.
-the second public issue of equity becomes available.
-the company's founders or venture capitalists market a portion of their shares.
-not all of the shares in a primary IPO were sold.

8. A major purpose of the prospectus is to:

-inform investors of the security's rate of return.
-advise investors of the security's potential risk.
-distribute stock warrants to prospective investors.
-list the security's dividend payment dates.

9.
The primary reason for an underwriters' syndication is to: -monitor the actions of the
different underwriters.
-reduce the risk of selling a large issue.
-increase the size of the spread.
-avoid the scrutiny of the Securities and Exchange Commission.

10.
A prospectus is a legal document:
-issued by the SEC authorizing a new issue of securities.
-that must be filed with the SEC prior to issuing any new securities.
-issued by the SEC which outlines the changes required for a registration statement to be
approved.
-which describes the details of a proposed security offering along with relevant information
about the issuer.
-which explains how new securities can be issued without the permission of the SEC.

11.
A public issue of securities where existing shareholders are given the first opportunity to
purchase the new securities is called a _____ offering.
-best efforts
-firm commitment
-general cash
-rights
-priority

12.
A corporation's first sale of equity securities to the public is called a(n): -share repurchase
program.
-shelf registration filing.
-private placement.
-seasoned equity offering.
-initial public offering.
13.
What is a seasoned equity offering?
-shares of stock that have been available for public purchase but remain unsold -shares of
stock purchased by an underwriter that can be resold to the general public after six months
-equity securities held by a firm's founder that will be offered to the general public once all
the IPO shares are sold
-sale of newly issued equity shares by a firm that is currently publicly owned
-a set number of equity shares that are offered to the public once a year

14.
What is the definition of a syndicate?
-a formalized cartel created to control the ownership of a firm
-a group of attorneys united for the purpose of taking a private firm public
-a group of investors who purchase sufficient equity shares such that they can control the
operations of a public corporation
-a group of bankers who jointly loan funds to finance the start-up of a new firm
-a group of underwriters formed to share the risk of marketing and distributing new
securities to the investing public

15.
The type of underwriting where a syndicate sells as much of an issue as possible, but can
return any unsold securities to the issuing firm without any further financial responsibility, is
called a _____ offering.
-best efforts
-shelf
-direct rights -private placement -firm commitment

16.
A lockup agreement is an agreement included in an underwriting contract which:
-guarantees the purchase of the entire issue by the underwriting syndicate.
-guarantees that additional shares can be purchased by the underwriting syndicate at the
offer price during a stated period of time.
-prohibits the issuer from offering additional securities for sale for an agreed upon period of
time.
-establishes the gross spread to which the underwriters are entitled as a fee for services.
-prohibits company insiders from selling their securities to the public during the 180 day
period following an IPO.

17.
With Dutch auction underwriting:
-each winning bidder pays the price he or she bid.
-all successful bidders pay the same price.
-all bidders receive at least a portion of the quantity on which they bid. -the selling firm
receives the maximum possible price for each item sold. -the bidder for the largest quantity
receives the first allocation of the item.

18.
When a firm announces an upcoming seasoned stock offering, the market price of the firm's
existing shares tends to:
-increase.
-decrease.
-remain constant.
-respond but the direction of the response is not predictable as shown in past studies.
-decrease momentarily and then immediately increase substantially within the hour.

19.
On May 19, 2011, Intesa Sanpaolo SpA, the largest Italian bank, disclosed the terms of its
capital increase announced on April 6, 2011. It wanted to raise €5 billion by issuing 2 new
common shares for every 7 existing shares (common and non-voting stocks). The issue price
was of €1.369 and the market price at launch was €2.01. The offer period was fixed from
May 23 to June 10, 2011, while rights were traded from May 23 to June 3, 2011. Based on
the above information determine the number of new shares issued and the number of
outstanding shares after the capital increase:
-2,675 bln and 3,578 bln shares
-4,765 bln and 9,435 bln shares
-3,652 bln and 12,783 bln shares
-3,652 bln and 16,435 bln shares

20.
Continuing the previous question, calculate the TERP:
-€1,52
-€1,86
-€1,62 -€2,74
-€0,98