Spandra Electronics wants to raise money by selling stock. After talking to several investment
banking firms, Spandra decides to hire Goldman Sachs to sell 5 million shares of its common stock.
Goldman sells 4.5 million shares and returns the rest to Spandra. This is an example of
A) a competitive bid purchase.
B) a privileged subscription with a standby agreement.
C) a privileged subscription with a standby agreement.
D) a commission or best-efforts agreement.
Question 2
Investment A has an expected return of 15 per year, while Investment B has an expected return of
12 per year. A rational investor will choose
A) Investment A if A and B are of equal risk.
B) Investment A because of the higher expected return.
C) Investment B because a lower return means lower risk.
D) Investment A only if the standard deviation of returns for A is higher than the standard
deviation of returns for B.
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