Exam 15: Raising Capital

Bakers' Town Bread is selling 1,500 shares of stock through a Dutch auction. The bids received are as follows: 200 shares at $17 a share, 400 shares at $15, 700 shares at $14, 400 shares at $13, and 200 shares at $11 a share. How much cash will the company receive from selling these shares of stock? Ignore all transaction and flotation costs.

Which one of these describes an exception to the registration filing requirement of the SEC?

Eastern Electric is offering 2,100 shares of stock in a Dutch auction. The bids include: 1,400 shares at $32 a share, 1,500 shares at $31, 1,400 shares at $30, and 900 shares at $29 a share. How much cash will Eastern Electric receive from selling these shares? Ignore all transaction and flotation costs.

The Timken Company has announced a rights offer to raise $5.1 million. The company's stock currently sells for $34 per share, there are 1.207 million shares outstanding, and one right will be granted for each outstanding share. The subscription price is set at $30 per share. What is the ex-rights price per share?

Mountain Homes is considering an expansion costing $5.7 million that will increase net income by $452,000. The company currently has 2.3 million shares outstanding and no debt. The stock sells for $38 per share and the book value per share is $27. The current net income is $1.02 million. Assume the firm issues new equity to fund this expansion while maintaining a constant price-earnings ratio. What will be the EPS after the new equity issue?

M&C Merchants is offering $2.5 million of new securities to the general public. Which SEC regulation governs this offering?

The Boat Works decided to go public by offering a total of 135,000 shares of common stock to the public. The company hired an underwriter who arranged a firm commitment underwriting and an initial selling price of $24 a share with a spread of 8.3 percent. As it turned out, the underwriters only sold 122,400 shares to the public. What is the amount paid to the issuer?

To purchase a share in a rights offering, an existing shareholder generally just needs to:

The difference between the underwriters' cost of buying shares in a firm commitment and the offering price of those securities to the public is called the:

Shelf registration allows a firm to register multiple issues at one time with the SEC and then sell those registered shares anytime during the subsequent:

With firm commitment underwriting, the issuing firm:

Richard placed an order for 1,000 shares in each of three IPOs at $28 a share. He was allocated 1,000 shares of IPO A, 200 shares of IPO B, and 600 shares of IPO C. On the first day of trading, IPO A opened at $28 a share and ended the day at $24.25 a share. IPO B opened at $30 a share and finished the day at $37 a share. IPO C opened at $28 a share and ended the day at $27.65 a share. What is the total profit or loss on these three IPO purchases as of the end of the first day of trading?

Trevor is the CEO of Harvest Foods, which is a privately held corporation. What is the first step he must take if he wishes to take Harvest Foods public?

Winston's has 12,500 shares outstanding with a market value of $288,625. The company is considering a project with a net present value of $5,300 that would require the purchase of $69,000 of fixed assets. The project would be financed through the sale of equity shares. The price-earnings ratio of the project equals that of the existing firm. What will the new market value per share be after the project is implemented?

Business Aid is funded by a group of wealthy investors for the sole purpose of providing funding for individuals and small firms that are trying to convert their new ideas into viable products. What is this type of funding called?

The 40-day period following an IPO during which the SEC places restrictions on the public communications of the issuer is known as the ________ period.

Advertisements in a financial newspaper announcing a public offering of securities, along with a list of the investment banks handling the offering, are called:

Which one of the following is a key goal of the aftermarket period?

Northwest Rail wants to raise $27.8 million through a rights offering to upgrade its rail lines. How many shares of stock need to be sold if the current market price is $30.34 a share and the subscription price is $26.50 a share?

Underwriters generally: