Practice Test: Finance, Financial Statements and Disclosure
20 questions on capital markets, financial statements, valuation and corporate disclosure from Business Acumen for Strategic Communicators, chapters 7 to 9.
20 questions · pass mark 70% · try 5 free
1 In its July 2002 IPO, Netflix sold 5.5 million shares at $15 a share. How much did it raise, in millions of dollars?
5.5 million shares × $15 = $82.5 million. The lead underwriter was Merrill Lynch (Chapter 7).
2 Which of the following is NOT one of the ways Chapter 7 lists for a company to access capital?
- Reinvesting retained earnings
- Crowdfunding campaigns such as Kickstarter
- Selling bonds to investors
- Filing a Form 4 with the SEC
The options listed are retained earnings, grants and gifts (such as crowdfunding), bank loans and lines of credit, bonds, and stock. A Form 4 is a Chapter 9 filing for insider trades, not a source of capital.
3 According to the textbook, the global bond market is larger than the global equity (stock) market.
- True
- False
True. Global equity markets are worth around $75 trillion, while global bond markets are worth more than $100 trillion, even though stocks get more media attention.
4 In what year was the NASDAQ founded?
- 1792
- 1934
- 1971
- 2000
The NASDAQ was founded in 1971 and has always been all-electronic. 1792 is the NYSE's founding year, and 1934 is the year of the Securities Exchange Act.
5 Which companies does the textbook name as having gone public through a direct listing? Select all that apply.
Select all that apply
- Palantir Technologies
- Slack Technologies
- Spotify Technology
- Netflix
- WeWork
Palantir, Slack and Spotify are the direct-listing examples. Netflix held a traditional IPO in 2002, and WeWork postponed its planned 2019 IPO.
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