Stephen A. Ross,
Massachusetts Institute of Technology
Randolph W. Westerfield,
University of Southern California
Bradford D. Jordan,
University of Kentucky
Gordon S. Roberts,
York University
| Best Efforts Underwriting | Underwriter sells as much of the issue as possible, but can return any unsold shares to the issuer without financial responsibility.
(See Refer to page 499)
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| Bought Deal | One underwriter buys securities from an issuing firm and sells them directly to a small number of investors.
(See Refer to page 499)
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| Dilution | Loss in existing shareholders' value, in either ownership, market value, book value, or EPS.
(See Refer to page 515)
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| Ex Rights | Period when stock is selling without a recently declared right, normally beginning four business days before the holder-of-record date.
(See Refer to page 512)
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| Firm Commitment Underwriting | Underwriter buys the entire issue, assuming full financial responsibility for any unsold shares.
(See Refer to page 499)
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| Holder-of-Record Date | The date on which existing shareholders on company records are designated as the recipients of stock rights. Also the date of record.
(See Refer to page 512)
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| Initial Public Offering (IPO) | A company's first equity issue made available to the public. Also an unseasoned new issue.
(See Refer to page 497)
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| Oversubscription Privilege | Allows shareholders to purchase unsubscribed shares in a rights offering at the subscription price.
(See Refer to page 514)
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| Private Placements | Loans, usually long term in nature, provided directly by a limited number of investors.
(See Refer to page 518)
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| Prospectus | Legal document describing details of the issuing corporation and the proposed offering to potential investors.
(See Refer to page 497)
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| Red Herring | Preliminary prospectus distributed to prospective investors in a new issue of securities.
(See Refer to page 497)
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| Regular Underwriting | The purchase of securities from the issuing company by an investment banker for resale to the public.
(See Refer to page 499)
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| Spread | Compensation to the underwriter, determined by the difference between the underwriter's buying price and offering price.
(See Refer to page 498)
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| Standby Fee | Amount paid to underwriter participating in standby underwriting agreement.
(See Refer to page 514)
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| Standby Underwriting | Agreement where the underwriter agrees to purchase the unsubscribed portion of the issue.
(See Refer to page 513)
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| Syndicate | A group of underwriters formed to reduce the risk and help to sell an issue.
(See Refer to page 498)
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| Term Loans | Direct business loans of, typically, one to five years.
(See Refer to page 517)
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| Venture Capital | Financing for new, often high-risk ventures.
(See Refer to page 494)
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2002 McGraw-Hill Higher Education