The company’s new market value. Introduction: The present or the newly quoted price for the market traded securities is the new market value . The new market value is mostly referred to as the price of the asset.

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Answer 1

Question

Chapter 15, Problem 1QP

a)

Summary Introduction

To find: The company’s new market value.

Introduction:

The present or the newly quoted price for the market traded securities is the new market value. The new market value is mostly referred to as the price of the asset.

b)

Summary Introduction

To find: The number of rights that are associated with one of the shares

Introduction:

The public issue of securities, in which the securities are generally at an initial stage, offered to the owners or the existing shareholders of the company is a right offer. In the rights offering every shareholder of the company gets one right for each share the rights offer owns.

c)

Summary Introduction

To find: The price of the ex-rights.

Introduction:

The shares of the traded stock that no longer have the rights attached to it because they might have expired, been exercised, or transferred to another investor is an ex-right shares.

d)

Summary Introduction

To find: The value of a right

Introduction:

The mathematically computed value of the subscription right after the announcements of the offering and before the expiration of the rights is the value of rights.

e)

Summary Introduction

To find: The reason for the company to have a rights offering instead of a general cash offer

Introduction:

The cash offer is a type of public issue that makes the availability of the shares to the general public in an initial public offering.

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QUESTION 3 (a) Win Corp. is proposing a rights offering. Presently there are 650,000 sharesoutstanding at RM21 each. There will 40,000 new shares offered at RM15 each.Calculate the following:(i) New market value of the company.(ii) Numbers of rights that associated with one new shares.(iii) The ex-rights price.(iv) The value of a right.(v) Total flotation cost. Given the flotation cost is 7 percent.

Do solve all three parts Suppose that your company wants to raise additional money via a right offering. Currently, the value of the company is $10,000,000 and the price per share is $100. The company wants to raise $1,000,000. (a) Suppose that your company wants to avoid a large drop in price after the rights offering. In particular, it wants the ex-rights price to be $95. What should be the subscription price? How many additional shares should the company issue? (b) Compute the value of the right. How many rights are required to buy one share? (c) Suppose now that the firm decides to hire an investment bank as an underwriter to facilitate the process. Suppose that the underwriter charges a 2% fee for each dollar raised in the rights offering. Redo part (a), assuming that the ex-rights price is still $95. How does your answer change if, on top of the 2% fee, the underwriter requires a fixed payment of $10,000?

13. Suppose the next MMO trade represents a sale of 200 shares at a price that is $0.33 lower than the last transaction. What will you see scrolling on the ticker for this transaction?

Answer 2

Question

Chapter 15, Problem 1QP

a)

Summary Introduction

To find: The company’s new market value.

Introduction:

The present or the newly quoted price for the market traded securities is the new market value. The new market value is mostly referred to as the price of the asset.

b)

Summary Introduction

To find: The number of rights that are associated with one of the shares

Introduction:

The public issue of securities, in which the securities are generally at an initial stage, offered to the owners or the existing shareholders of the company is a right offer. In the rights offering every shareholder of the company gets one right for each share the rights offer owns.

c)

Summary Introduction

To find: The price of the ex-rights.

Introduction:

The shares of the traded stock that no longer have the rights attached to it because they might have expired, been exercised, or transferred to another investor is an ex-right shares.

d)

Summary Introduction

To find: The value of a right

Introduction:

The mathematically computed value of the subscription right after the announcements of the offering and before the expiration of the rights is the value of rights.

e)

Summary Introduction

To find: The reason for the company to have a rights offering instead of a general cash offer

Introduction:

The cash offer is a type of public issue that makes the availability of the shares to the general public in an initial public offering.

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Answer 3

Question

Chapter 15, Problem 1QP

a)

Summary Introduction

To find: The company’s new market value.

Introduction:

The present or the newly quoted price for the market traded securities is the new market value. The new market value is mostly referred to as the price of the asset.

b)

Summary Introduction

To find: The number of rights that are associated with one of the shares

Introduction:

The public issue of securities, in which the securities are generally at an initial stage, offered to the owners or the existing shareholders of the company is a right offer. In the rights offering every shareholder of the company gets one right for each share the rights offer owns.

c)

Summary Introduction

To find: The price of the ex-rights.

Introduction:

The shares of the traded stock that no longer have the rights attached to it because they might have expired, been exercised, or transferred to another investor is an ex-right shares.

d)

Summary Introduction

To find: The value of a right

Introduction:

The mathematically computed value of the subscription right after the announcements of the offering and before the expiration of the rights is the value of rights.

e)

Summary Introduction

To find: The reason for the company to have a rights offering instead of a general cash offer

Introduction:

The cash offer is a type of public issue that makes the availability of the shares to the general public in an initial public offering.

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Answer 4

Question

Chapter 15, Problem 1QP

a)

Summary Introduction

To find: The company’s new market value.

Introduction:

The present or the newly quoted price for the market traded securities is the new market value. The new market value is mostly referred to as the price of the asset.

b)

Summary Introduction

To find: The number of rights that are associated with one of the shares

Introduction:

The public issue of securities, in which the securities are generally at an initial stage, offered to the owners or the existing shareholders of the company is a right offer. In the rights offering every shareholder of the company gets one right for each share the rights offer owns.

c)

Summary Introduction

To find: The price of the ex-rights.

Introduction:

The shares of the traded stock that no longer have the rights attached to it because they might have expired, been exercised, or transferred to another investor is an ex-right shares.

d)

Summary Introduction

To find: The value of a right

Introduction:

The mathematically computed value of the subscription right after the announcements of the offering and before the expiration of the rights is the value of rights.

e)

Summary Introduction

To find: The reason for the company to have a rights offering instead of a general cash offer

Introduction:

The cash offer is a type of public issue that makes the availability of the shares to the general public in an initial public offering.

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Answer 5

Chapter 15, Problem 1QP

a)

Summary Introduction

To find: The company’s new market value.

Introduction:

The present or the newly quoted price for the market traded securities is the new market value. The new market value is mostly referred to as the price of the asset.

b)

Summary Introduction

To find: The number of rights that are associated with one of the shares

Introduction:

The public issue of securities, in which the securities are generally at an initial stage, offered to the owners or the existing shareholders of the company is a right offer. In the rights offering every shareholder of the company gets one right for each share the rights offer owns.

c)

Summary Introduction

To find: The price of the ex-rights.

Introduction:

The shares of the traded stock that no longer have the rights attached to it because they might have expired, been exercised, or transferred to another investor is an ex-right shares.

d)

Summary Introduction

To find: The value of a right

Introduction:

The mathematically computed value of the subscription right after the announcements of the offering and before the expiration of the rights is the value of rights.

e)

Summary Introduction

To find: The reason for the company to have a rights offering instead of a general cash offer

Introduction:

The cash offer is a type of public issue that makes the availability of the shares to the general public in an initial public offering.

Answer 6

Chapter 15, Problem 1QP

a)

Summary Introduction

To find: The company’s new market value.

Introduction:

The present or the newly quoted price for the market traded securities is the new market value. The new market value is mostly referred to as the price of the asset.

Answer 7

Chapter 15, Problem 1QP

a)

Summary Introduction

To find: The company’s new market value.

Introduction:

The present or the newly quoted price for the market traded securities is the new market value. The new market value is mostly referred to as the price of the asset.

Answer 8

b)

Summary Introduction

To find: The number of rights that are associated with one of the shares

Introduction:

The public issue of securities, in which the securities are generally at an initial stage, offered to the owners or the existing shareholders of the company is a right offer. In the rights offering every shareholder of the company gets one right for each share the rights offer owns.

Answer 9

b)

Summary Introduction

To find: The number of rights that are associated with one of the shares

Introduction:

The public issue of securities, in which the securities are generally at an initial stage, offered to the owners or the existing shareholders of the company is a right offer. In the rights offering every shareholder of the company gets one right for each share the rights offer owns.

Answer 10

c)

Summary Introduction

To find: The price of the ex-rights.

Introduction:

The shares of the traded stock that no longer have the rights attached to it because they might have expired, been exercised, or transferred to another investor is an ex-right shares.

Answer 11

c)

Summary Introduction

To find: The price of the ex-rights.

Introduction:

The shares of the traded stock that no longer have the rights attached to it because they might have expired, been exercised, or transferred to another investor is an ex-right shares.

Answer 12

d)

Summary Introduction

To find: The value of a right

Introduction:

The mathematically computed value of the subscription right after the announcements of the offering and before the expiration of the rights is the value of rights.

Answer 13

d)

Summary Introduction

To find: The value of a right

Introduction:

The mathematically computed value of the subscription right after the announcements of the offering and before the expiration of the rights is the value of rights.

Answer 14

e)

Summary Introduction

To find: The reason for the company to have a rights offering instead of a general cash offer

Introduction:

The cash offer is a type of public issue that makes the availability of the shares to the general public in an initial public offering.

Answer 15

e)

Summary Introduction

To find: The reason for the company to have a rights offering instead of a general cash offer

Introduction:

The cash offer is a type of public issue that makes the availability of the shares to the general public in an initial public offering.

Answer 16

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Answer 17

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Answer 18

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Answer 19

Ch. 15.1 - Prob. 15.1ACQ Ch. 15.1 - Prob. 15.1BCQ Ch. 15.2 - What are the basic procedures in selling a new...Ch. 15.2 - What is a registration statement?Ch. 15.3 - Prob. 15.3ACQ Ch. 15.3 - Why is an initial public offering necessarily a...Ch. 15.4 - Prob. 15.4ACQ Ch. 15.4 - Prob. 15.4BCQ Ch. 15.5 - Prob. 15.5ACQ Ch. 15.5 - Suppose a stockbroker calls you up out of the blue...

The company’s new market value. Introduction: The present or the newly quoted price for the market traded securities is the new market value . The new market value is mostly referred to as the price of the asset.

Solution Summary: The author explains how the company's new market value is calculated by dividing the old shares by the new shares.

To find: The company’s new market value.

Introduction:

The present or the newly quoted price for the market traded securities is the new market value. The new market value is mostly referred to as the price of the asset.

To find: The price of the ex-rights.

Introduction:

The shares of the traded stock that no longer have the rights attached to it because they might have expired, been exercised, or transferred to another investor is an ex-right shares.

To find: The value of a right

Introduction:

The mathematically computed value of the subscription right after the announcements of the offering and before the expiration of the rights is the value of rights.

To find: The reason for the company to have a rights offering instead of a general cash offer

Introduction:

The cash offer is a type of public issue that makes the availability of the shares to the general public in an initial public offering.

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Chapter 15 Solutions

The company’s new market value. Introduction: The present or the newly quoted price for the market traded securities is the new market value . The new market value is mostly referred to as the price of the asset.

Solution Summary: The author explains how the company's new market value is calculated by dividing the old shares by the new shares.

To find: The company’s new market value. Introduction: The present or the newly quoted price for the market traded securities is the new market value. The new market value is mostly referred to as the price of the asset.

To find: The price of the ex-rights. Introduction: The shares of the traded stock that no longer have the rights attached to it because they might have expired, been exercised, or transferred to another investor is an ex-right shares.

To find: The value of a right Introduction: The mathematically computed value of the subscription right after the announcements of the offering and before the expiration of the rights is the value of rights.

To find: The reason for the company to have a rights offering instead of a general cash offer Introduction: The cash offer is a type of public issue that makes the availability of the shares to the general public in an initial public offering.

Want to see the full answer?

Chapter 15 Solutions

To find: The company’s new market value.

Introduction:

The present or the newly quoted price for the market traded securities is the new market value. The new market value is mostly referred to as the price of the asset.

To find: The price of the ex-rights.

Introduction:

The shares of the traded stock that no longer have the rights attached to it because they might have expired, been exercised, or transferred to another investor is an ex-right shares.

To find: The value of a right

Introduction:

The mathematically computed value of the subscription right after the announcements of the offering and before the expiration of the rights is the value of rights.

To find: The reason for the company to have a rights offering instead of a general cash offer

Introduction:

The cash offer is a type of public issue that makes the availability of the shares to the general public in an initial public offering.