1. Which of the following five statements are false?

Researchers have found that, on average, the market greets the news of an SEO with a price increase.

Individual investors who buy equity in small private firms are called angel investors.

Venture Capitalists use their control to protect their investments, so they may therefore perform a key nurturing and monitoring role for the firm.

Typically the issuance and transaction costs of raising equity capital are much lower for a firm compared to the costs of raising the same amount of debt financing.

By going public, companies give their private equity investors the ability to diversify.

2. Which of the following five statements are correct?

Firms should monitor accounts payable to make sure that they are making the payments at earliest possible time.

Dual class shares are common in Sweden, but very uncommon in the US.

Working capital management involves managing the firm’s shortterm assets and shortterm liabilities, and therefore includes the management of payables, receivables, inventory and cash.

The matching principle indicates that the firm should finance permanent working capital with shortterm sources of funds.

Trade credit is a form of loan from a bank to the selling firm to compensate for outstanding receivables.