Exam 20: Issuing Securities to the Public

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 ______ .

Assuming everything else is constant, if a stock's old price is $40 and the ex-rights or new stock price is $32, then the value of the right is:

A registration statement is effective on the 20^thday after filing unless:

The Holyoke Corporation has 120,000 shares outstanding with a current market price of $8.10 per share. The company needs to raise an additional $36,000 to finance new expenditures, and has decided on a right issue. the issue will allow current stockholders to purchase one additional share for 20 rights at a subscription price of $6 per share. -Calculate the ex-rights price that would make a new stockholder indifferent between buying shares at the old stock price and exercising the rights or buying the shares ex-rights.

The Shields Corporation intends to issue 100,000 new shares to raise funds for expansion of current plant facilities.The current share price is $20 and there are 500,000 shares outstanding.The number of rights needed to buy a share of stock should be:

Which of the following is not one of the four main functions that underwriters provide?

In a best efforts offering the investment banker makes their money primarily by:

An equity issue sold directly to the public is called:

Professor Jay Ritter found best-efforts offerings are:

Regulation A security issues are exempt from full SEC registration filing and use only a brief offering statement if:

Dilution refers to:

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.

Which of the following statements is true?

Lamar Inc.is attempting to raise $5,000,000 in new equity with a rights offering.The subscription price will be $40 per share.The stock currently sells for $50 per share and there are 250,000 shares outstanding.How many rights are needed to buy a new share?

Companies use tombstone advertisements in the financial press to:

A study by Lee, Lockhead, Ritter, and Zhao that examined the underwriting discount and other direct costs of going public with a debt or equity offering, found:

A new public equity issue from a company with equity previously outstanding is called a(n):

A firm commitment arrangement with an investment banker occurs when:

The Wordsmith Corporation has 10,000 shares outstanding at $30 each.They expect to raise $150,000 by a rights offering with a subscription price of $25.How many rights must you turn in to get a new share?

Venture capitalists provide financing for new firms from the seed and start-up stage all the way to mezzanine and bridge financing.In exchange for financing, entrepreneurs give: