Chapter 15 MC

# A stock is traded rights on the market price per

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A stock is traded rights on; the market price per share of the common stock is \$100; the subscription price is \$80; and the number of rights needed to buy a new share is 19. Calculate the approximate value of a right: a. \$3.00 b. \$2.00 c. \$1.00 d. \$1.05 181

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15-27. A stock is trading ex rights; the market price per share of the common stock is \$80; the subscription price is \$62; and the number of rights is 5. Calculate the approximate value of a right: a. \$3.60 b. \$3.00 c. \$2.50 d. \$2.00 15-28. Warrants have value until: a. the expiration date b. the ex-rights date c. the sale date d. the rights-on date 15-29. The exercise value of a warrant is: a. the amount saved by purchasing the common stock by exercising the warrant rather than buying the common stock in the open market b. the amount saved by purchasing the common stock by selling the warrant rather than selling the common stock directly in the open market c. the amount saved by purchasing the common stock by exercising the warrant rather than selling the common stock in the open market d. the amount saved by purchasing the common stock by exercising the warrant rather than selling the common stock directly to investment bankers 15-30. The exercise value of a warrant is zero if: a. the common stock price is at or above the exercise price b. the common stock price is equal to the exercise price c. the common stock price is at or below the exercise price d. the common stock price is below the exercise price 15-31. The exercise price of a warrant is \$45 per share; current market price of the common stock is \$55; number of shares that can be purchased by exercising the warrant is 5. Calculate the exercise value of the warrant: a. \$5 b. \$50 c. \$0 d. \$10 182
15-32. The warrant’s time value is equal to: a. the market price of the warrant minus its exercise value b. market price/exercise value c. exercise value/market price d. (market price - exercise value)/number of shares 15-33. The market value of a warrant: a. is decreased with a greater expected volatility of the stock price b. is decreased with a greater time to expiration of the warrant c. decreases if the stock price increases d. is increased with a greater expected volatility of the stock price 15-34. A stock is trading ex-rights; the market price per share of common stock is \$75; the number of rights needed to buy one new share is 3, and the value of a right is 5. Calculate the subscription price: a. 65 b. 70 c. 60 d. 80 15-35. If a nine-member board of directors is being elected, how many board members can stockholders elect under the majority voting rule if there are 200,000 shares outstanding? a. 9 b. 8 c. 7 d. 6 15.36. Which of the following is true? a. Controlling interest and majority interest are synonyms.

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