Exam 20: Raising Capital

Lamar Inc. is attempting to raise $5,000,000 in new equity with a rights offering. The subscription price for the 125,000 new shares will be $40 per share. The stock currently sells for $50 per share and there are 250,000 shares outstanding. What will the price per share be if all rights are exercised?

For a particular stock the old stock price is $20,the ex-rights price is $15,and the number of rights needed to buy a new share is 2. Assuming everything else constant,the subscription price is ______.

For smaller IPOs,direct expenses as a percentage of total proceeds is _______.

The market for venture capital refers to the:

Explain the advantages of a shelf-registration to an issuer. How can timeliness of disclosure and a potential market overhang work against a shelf-registration?

The Schraeder Corporation has 20,000 shares outstanding at $20 each. They expect to raise $200,000 by a rights offering with a subscription price of $25. How many rights must you turn in to get a new share?

Venture capitalists are

The first public equity issue made by a company is a(n):

Corporations are allowed to use the shelf registration method if they:

To determine the value of a rights offering,the stockholder needs to know the following two pieces of information in addition to the current stock price:

A rights offering is:

The Direct Interactive Publishing Company is planning to raise $200 million dollars in new capital. There are currently 50 million shares outstanding with an estimated market price of $60 each. The corporate officers are debating whether to use a rights offering (with or without a standby underwriting) or have the issue fully underwritten. The company is currently listed on a regional exchange and plans to list on a national exchange after the security issue. List and explain three advantages/disadvantages of each method.

The evidence on IPO sales is varied from issue to issue,but there are three common themes; underpricing,underperformance,and the reasons for going public. Explain these three themes.