Sample_Test_Question_Chapter_15 - I) Private financial...

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1 Sample test questions for Chapter 15 1. The New Word Corporation has 1,000,000 shares outstanding at $30/share. Each share has one right. If the firm wishes to raise $13.5 million at a subscription price of $27/share, calculate the value of a right. A. $1.00/right B. $2.10/right C. $3.00/right D. $2.56/right # of new shares = 13,500,000/27 = 500,000 shares; # rights required to buy a new share = 1,000,000/500,000 = 2 rights; ex rights price = ($30*1m + $13.5m)/(1m+.5m) = $29. Old share price – ex rights share price = $30 - $29 = $1 2. A new public equity issue from a company with public equity previously outstanding is called: A. An initial public offering (IPO) B. American depositing receipts (ADRs) C. A seasoned equity offering (SEO) D. A private placement 3. The market for venture capital refers to the:
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Unformatted text preview: I) Private financial marketplace for providing equity investment for small, startup firms II) Bond market III) Market for providing equity to well-established firms A. I only B. II only C. II and III only D. III only 4. Suppose a government wishes to auction 1 million bonds and three would-be buyers submit bids. Price Quantity Buyer A $1200 .75 million Buyer B $1100 .5 million Buyer C $1050 .8 million In an uniform-price auction: A. Buyer A pays $1,100 and Buyer B pays $1,050 B. Buyer A pays $1,200 and Buyer B pays $1,100 C. Buyer A pays $1050 and Buyer B pays $1050 D. Buyer A pays $1,100 and Buyer B Pays $1,100 The highest price that clears the market is the price in a uniform price auction. 2 5. The managing underwriter is also called the: A. syndicate B. bookrunner C. spet D. none of the above...
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This note was uploaded on 05/09/2011 for the course FNAN 522 taught by Professor Wilson during the Spring '11 term at University of Louisiana at Lafayette.

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Sample_Test_Question_Chapter_15 - I) Private financial...

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