Deck 15: Raising Capital

Question 1

A new issue of common stock offered to the general public by a firm that is currently publicly held is called a(n):

A)initial public offering.
B)private placement.
C)rights offer.
D)venture capital offer.
E)seasoned equity offering.

Answer 1

seasoned equity offering.

Question 2

What is the advertisement, commonly found in financial newspapers, that announces a public offering of securities and provides the name of the underwriters called?

A)Prospectus
B)Red herring
C)Tombstone
D)Green Shoe
E)Underwriter's ad

Answer 2

Tombstone

Question 3

Deep Water Marina has 12,000 shares of stock outstanding that were sold to the general public last year.The firm has just decided to issue an additional 4,000 shares and will make these shares available to the firm's current shareholders before making any offer to the general public.Which type of offer is this?

A)General cash offer
B)Rights offer
C)In-house offering
D)Private placement
E)Initial public offering

Answer 3

Rights offer

Question 4

Which one of the following terms is defined as an underwriting for which the underwriters assume full responsibility for any unsold shares?

A)Initial public offering
B)Best efforts underwriting
C)Firm commitment underwriting
D)Rights offer
E)Private placement

Question 5

What is the legal document called that is provided to potential investors and describes a new security offering?

A)Security agreement
B)Prospectus
C)Public statement
D)Registration statement
E)Formal filing

Question 6

Which one of the following describes a Green Shoe provision?

A)Determination of underwriters' fees
B)Guarantee of sale for all offered shares
C)Price auction
D)Overallotment option
E)Description of issue excluding the offer price

Question 7

Which one of the following is an underwriting of securities where the offer price is determined by investor bids?

A)Private placement
B)Best efforts underwriting
C)Initial public offering
D)Green Shoe option
E)Dutch auction

Question 8

GW Underwriters retains the difference between its buying price and its offering price on new securities.What is this amount called?

A)Markup
B)Commission
C)Rights price
D)Spread
E)Offer

Question 9

Which one of the following projects is most apt to be financed with venture capital?

A)Additional warehouse space for a profitable trucking firm
B)New product for an international plastics manufacturing company
C)Prototype for a newly patented hand tool by an individual inventor
D)Seasonal merchandise for a major retailer
E)Domestic outlet for a large global exporter

Question 10

What is the group of underwriters called who share both the risks and the marketing responsibilities for a securities offering?

A)Syndicate
B)Underwriting cartel
C)Firm commitment group
D)Dutch auction group
E)Venture capitalists

Question 11

Venture capital is most apt to be the source of funding for a:

A)bankruptcy reorganization.
B)global expansion of an established firm.
C)new, high-risk venture.
D)seasonal production costs.
E)daily operations for an established, profitable firm.

Question 12

Which one of the following specifies the length of time that must pass after an initial public offering (IPO) before insiders are permitted to sell their shares?

A)Lockup period
B)Quiet period
C)Comment period
D)Green Shoe period
E)Rights offer period

Question 13

Which one of the following best describes a private placement?

A)Interim financing for a new, high-risk entity
B)Long-term loan by a limited number of investors
C)Two-year direct business loan
D)Three-year loan to a firm by its original founder
E)New equity issue offered to current shareholders

Question 14

AJ's Glass Works just arranged a three-year direct business loan.Which one of the following terms matches this loan arrangement?

A)Term loan
B)Private placement
C)Rights offer
D)Seasoned offer
E)Shelf offer

Question 15

Florida Farms recently offered 12,000 shares of stock for sale but received payment for only 10,500 shares since that was all the shares the underwriters could sell.What type of underwriting was this?

A)Syndicated
B)Firm commitment
C)Private placement
D)Best efforts
E)Dutch auction

Question 16

Modern Art Online is preparing to sell new shares of stock to the general public.As part of this process, the firm just filed the required paperwork with the SEC that contains the material information related to this issue of stock.What is the name associated with this paperwork?

A)Prospectus
B)Red herring
C)Security agreement
D)Comment letter
E)Registration statement

Question 17

A registration of securities under SEC 415 which permits a firm to issue the securities over a two-year period is which type of registration?

A)Seasoned registration
B)Negotiated registration
C)Shelf registration
D)Extended registration
E)Delayed registration

Question 18

Caitlyn is interested in purchasing 1,500 shares of ABC, Inc., when the shares are issued.Her broker just gave her a preliminary prospectus to review as she waits for the shares to be cleared for sale.What is the name of this prospectus?

A)Green Shoe
B)Rights offer
C)Red herring
D)Spread
E)Tombstone

Question 19

Marti's BBQ is offering 5,000 shares of stock to the general public on a cash basis.Which one of the following terms best applies to this offer?

A)Rights offer
B)General cash offer
C)Green Shoe
D)Red herring
E)Prospectus

Question 20

An initial public offering refers to:

A)the shares held by a firm's founder.
B)the most recently issued shares that were offered to the firm's existing shareholders.
C)any shares issued to the public on a cash basis.
D)the first sale of equity shares to the general public.
E)all shares issued prior to the firm going public.

Question 21

Who determines the offer price in a Dutch auction?

A)Lead underwriter
B)Chief financial officer of the issuing firm
C)SEC
D)Bidders
E)Board of directors of the issuing firm

Question 22

Which statement is correct?

A)Underwriters exercise the Green Shoe option whenever the market price of an IPO declines initially.
B)Underwriters guarantee the number of shares to be sold in a best efforts underwriting.
C)Competitive underwriting is generally more expensive than negotiated underwriting.
D)The majority of equity underwritings in the U.S.are competitive underwritings.
E)Underwriters may receive warrants as part of their compensation.

Question 23

Which of the following duties belong to the underwriters of a firm commitment securities offer?
I.Duty to offer the Green Shoe provision to all investors who buy at the offer price
II.Duty to set the offer price
III.Duty to distribute the offered shares
IV.Duty to purchase any unsold shares

A)I and III only
B)II and IV only
C)II, III, and IV only
D)I, II, and III only
E)I, II, III, and IV

Question 24

Which one of the following is an intended result of a lockup agreement?

A)Temporary support of the market price of IPO shares
B)Maximization of the return to a firm's original owners from an initial spike in the market price of IPO shares
C)Increase in the volume of trading for shares of a recent IPO
D)Limitation on the price volatility of recent IPO shares caused by day trading
E)Guarantee of a minimum number of sold shares for an IPO

Question 25

Which one of the following is an aftermarket function performed by the underwriters of a securities issue?

A)Distributing the registration statements
B)Distributing the red herrings
C)Filing a letter of comment with the SEC
D)Exercising the Green Shoe option
E)Setting the market price

Question 26

A lockup agreement ensures:

A)the lead underwriter maintains an economic interest in the IPO it is managing.
B)the issuer of new securities receives a minimally agreed upon amount from the issue.
C)no research reports are issued during the waiting period.
D)company insiders maintain an economic interest in the issuer of an IPO for a minimum period of time.
E)an IPO is not underpriced by more than five percent.

Question 27

Phil and Terry started a new business three years ago.Two years ago, they incorporated the business and issued themselves each 20,000 shares of stock.Last year, they took the company public in an IPO and issued an additional 100,000 shares of stock at that time.The offer price was $14 a share, the spread was 8 percent, and the lockup period was six months.The stock closed at $17 a share at the end of the first day of trading.During the first six months of trading, the stock had a price range of $13 to $23 per share.During the second six months of trading, the stock sold between $15 and $21 per share.Both Tracie and Amy purchased 100 shares at the offer price.Given this, which one of the following statements is correct? Ignore trading costs and taxes.

A)Tracie could have earned a maximum profit of 100($23 - 17) on her investment.
B)Phil could have sold 5,000 shares at $23 per share.
C)The underwriters earned a spread per share equal to 8 percent of $17.
D)The maximum price at which Terry could have sold his shares is $21.
E)Amy paid 108 percent of $14 per share to purchase her 100 shares.

Question 28

Which one of the following is probably the most effective means of increasing investors' interest in an IPO?

A)Extending the lockup period
B)Issuing the IPO through a rights offering
C)Underpricing the IPO
D)Eliminating the quiet period
E)Eliminating the Green Shoe option

Question 29

Space Tours wants to do an IPO but is not comfortable that underwriters will set the most optimal offer price for the securities.Which one of the following might the firm consider to address this uncertainty?

A)Extended quiet period
B)Extended lockup period
C)Best efforts underwriting
D)Dutch auction underwriting
E)Standby underwriting

Question 30

Which statement is true?

A)Venture capitalists tend to be long-term investors in a firm.
B)Venture capitalists generally have an exit strategy.
C)Venture capitalists generally provide all of their funding in one lump sum.
D)Venture capital is relatively easy to obtain given today's markets.
E)Venture capitalists tend to invest in a vast array of enterprises rather than specialize in a few areas.

Question 31

You own 400 of the 21,000 outstanding shares of DLK stock.The firm just announced that it will be issuing an additional 3,000 shares to the general public in a cash offer at $16 per share.What type of event are you participating in if you opt to purchase 100 of these additional shares?

A)Dutch auction
B)Seasoned equity offering
C)Private placement
D)IPO
E)Rights offer

Question 32

Assume the SEC approved the registration statement for a new securities issue this morning.Which one of the following statements must be true about this issue?

A)The red herrings can finally be distributed as their distribution was awaiting SEC approval.
B)The waiting period started when the approval was received this morning.
C)The SEC believes the issue will be a profitable investment for all purchases made at the offer price.
D)The issuer is following all the required rules and regulations in regard to this issue.
E)The final prospectuses have all been delivered or the SEC would not have approved the issue.

Question 33

The quiet period is designed to:

A)prevent the original investors in a firm from selling their shares and destabilizing a security's price during the first six months of public trading.
B)ensure that all potential investors have fair access to identical information.
C)ensure that all bidders are heard in a Dutch auction.
D)stabilize the aftermarket.
E)silence the market so the SEC can fairly set the offer price on an IPO.

Question 34

When issuing securities, which of the following can occur prior to receiving the approval by the SEC of a registration statement?
I.Oral offer to buy shares
II.Written offer to buy shares
III.Final determination of the offer price
IV.Distribution of a preliminary prospectus

A)I only
B)III only
C)III and IV only
D)I and IV only
E)None of the listed activities can occur until after the SEC approval is received.

Question 35

Which statement is correct?

A)IPO underpricing is minimal in China.
B)IPO underpricing is limited to the U.S.markets.
C)The percentage of underpricing remains stable over time in the U.S.
D)The only period in the U.S.when underpricing produced first day returns of 50 percent or more was during the tech bubble of 1999-2000.
E)Some of the greatest IPO underpricing has occurred in Saudi Arabia.

Question 36

Currently, you own 1.2 percent of the outstanding shares of Home Security.The firm has decided to issue additional shares of stock and has given you the first option to purchase 1.2 percent of those additional shares.What type of offer is this?

A)Rights offer
B)Red herring offer
C)Private placement
D)IPO
E)General cash offer

Question 37

Which of the following have been offered as justification for IPO underpricing?
I.Young firms tend to be very risky.
II.The best IPOs are oversubscribed.
III.Underwriters like to avoid lawsuits.
IV.Underpricing benefits the existing shareholders.

A)I and III only
B)II and IV only
C)I, II, and III only
D)II, III, and IV only
E)I, II, III, and IV

Question 38

Which of the following are important factors to consider when seeking a venture capitalist?
I.Exit strategy
II.Management style
III.Personal contacts
IV.Financial strength

A)I and III only
B)II and IV only
C)III and IV only
D)II, III, and IV only
E)I, II, III, and IV

Question 39

Which one of the following statements is correct?

A)Oral offers can be made for new securities during the waiting period.
B)A Green Shoe letter must be provided to all investors who purchase shares of a new equity offering.
C)Corporate directors have the authority to authorize additional shares of stock for a new issue.
D)The underwriters must approve any increase in the authorized number of shares for a firm.
E)When issuing new securities, the first step is the distribution of the prospectus.

Question 40

An average individual investor who participates in an IPO:

A)frequently earns high returns when shares are undersubscribed.
B)generally receives his or her full allocation of shares if oversubscription occurs.
C)often encounters the "winner's curse."
D)is protected from financial loss by the Green Shoe provision.
E)is subject to the lockup provision.

Question 41

Which statement is correct?

A)The financial market generally reacts the same to a new issue of equity as it does to a new issue of debt as long as the issuer is the same.
B)Issuing new equity shares is always viewed by the market as a positive event.
C)Informed managers tend to issue new securities when the existing securities are underpriced.
D)A decline in the price of existing stock when a new issue is released is a direct cost of selling securities.
E)A firm's existing shareholders would prefer that new securities be issued when those securities are overpriced rather than underpriced.

Question 42

Salem Pet Supply would like to sell 1,400 shares of stock using the Dutch auction method.The bids received are as follows: Bidder C will receive _____ shares and pay a price per share of _____.

A)0; $0
B)1,400; $27.00
C)455; $28.00
D)455; $29.00
E)700; $38.75

Question 43

The maximum amount of securities a company can issue in a 12-month period through crowdfunding is:

A)$50,000.
B)$50,000 the first year and up to $100,000 per year after that.
C)$100,000 per year during the first two years and up to $500,000 any year thereafter.
D)$1 million.
E)$100,000 per year up to a cumulative total of $1 million in all years.

Question 44

Robert placed an order with his broker to purchase 500 shares of each of three IPOs that are being released this month.Each IPO has an offer price of $21 a share.The number of shares allocated to Robert, along with the closing stock price at the end of the first day of trading for each stock, are as follows: What is his total profit or loss on these three stocks as of the end of the first day of trading for each stock?

A)$639.50
B)-$369.50
C)-1,350.00
D)$572.00
E)$1,370

Question 45

What is the maximum amount an investor can invest in crowdfunding issues in a 12-month period?

A)$10,000
B)$10,000 per security with a maximum of ten separate securities
C)$100,000 per security with a maximum of five separate securities
D)$100,000
E)$1 million spread over a maximum of ten separate securities

Question 46

Future Technology wants to raise $15 million to purchase equipment by issuing new securities.Management estimates the issue will cost the firm $926,250 for accounting, legal, and other costs.The underwriting spread is 6 percent and the issue price is $25 per share.How many shares of stock must be sold if the firm is to have sufficient funds remaining after costs to purchase all of the desired equipment?

A)608,010 shares
B)521,121 shares
C)677,713 shares
D)647,666 shares
E)582,139 shares

Question 47

Which statement is true?

A)Firms often pay higher interest rates on term loans than on public issues of debt.
B)The only difference between a term loan and a private placement is the size of the issue.
C)A prospectus is required for equity issues but not for debt issues.
D)The flotation costs of issuing debt tend to be more expensive than for issuing equity.
E)Direct long-term loans must be registered with the SEC.

Question 48

Which statement is true?

A)IPO underpricing primarily benefits a firm's pre-issue owners.
B)IPO underpricing is a function of the underwriting spread.
C)The more an issue is underpriced, the more it tends to be oversubscribed.
D)Underpricing tends to discourage investors from participating in the IPO market.
E)Undersubscribed shares generally tend to also be underpriced shares.

Question 49

Which statement is correct?

A)Rarely is debt issued privately in the U.S.
B)All U.S.debt issues, private and public, must be registered with the SEC.
C)Private placements generally have shorter maturities than term loans.
D)It is easier to renegotiate a public issue than it is a private issue of debt.
E)A direct placement of debt generally has more restrictive covenants than a public issue.

Question 50

Shelf registration:

A)only applies to initial public offerings.
B)only applies to debt securities.
C)only applies to securities issued through crowdfunding.
D)permits firms to sell the registered securities, if they so choose, over a two-year period.
E)requires that all registered securities be sold over a two-year period.

Question 51

Mimi placed an order with her broker to purchase 500 shares of each of three IPOs that are being released soon.Each IPO has an offer price of $15 a share.The number of shares allocated to her along with the closing stock price at the end of the first day of trading for each stock, are as follows: What is her total profit or loss on these three stocks as of the end of the first day of trading for each stock?

A)-$500
B)-$100
C)-$50
D)$0
E)$500

Question 52

Stock prices tend to _____ following the announcement of a new equity issue and tend to _____ following the announcement of a new debt issue.

A)increase; increase
B)increase; decrease
C)increase; remain relatively constant
D)decrease; increase
E)decrease; remain relatively constant

Question 53

If the market price of existing publicly traded shares declines due to the announcement of a seasoned issue of stock, the decline is referred to as which one of the following?

A)Spread
B)Direct underwriting cost
C)Underpricing
D)Direct issue cost
E)Abnormal return

Question 54

The total direct costs of a debt issue, when expressed as a percentage of gross proceeds, tends to:

A)increase as the quality of the debt increases.
B)decrease as the size of the issue decreases.
C)decrease when the bonds are convertible rather than straight.
D)decrease as the proceeds of the bond issue increase.
E)be relatively the same regardless of the type or quality of the debt issue.

Question 55

Nermine placed an order with her broker to purchase 1,500 shares of each of three IPOs that are being released this month.Each IPO has an offer price of $21 per share.The number of shares allocated to her along with the closing stock price at the end of the first day of trading for each stock, are as follows: What is her total profit or loss on these three stocks as of the end of the first day of trading for each stock?

A)-$1,950
B)$4,500
C)$5,145
D)$3,220
E)$2,450

Question 56

Which statement is correct?

A)The underwriters pay the spread.
B)Taxes are an indirect underwriting cost.
C)Seasoned equity offerings (SEOs) tend to be less costly than IPOs.
D)Straight bonds are more costly to issue than convertible bonds.
E)The total direct cost as a percentage of gross proceeds for an IPO tends to decrease as the size of the offer decreases.

Question 57

Pork King Farms would like to sell 2,600 shares of stock using a Dutch auction.The bids received are as follows: What is the total amount the issuer will receive from this auction? Ignore costs.

A)$88,400
B)$85,800
C)$88,400.
D)$91,000
E)$93,600

Question 58

Hulkster Company would like to sell 700 shares of stock using the Dutch auction method.The bids received are as follows: Bidder A will receive _____ shares and pay a price per share of ____.Bidder C will receive no allocation.

A)0; $0
B)75; $17
C)233; $17
D)187; $18
E)100; $18

Question 59

Which one of the following correctly states a qualification an issuer must meet to be qualified to use Rule 415 for shelf registration?

A)The issuer must never have defaulted on its debt.
B)The issuer must have outstanding stock with a market value in excess of $250 million.
C)The issuer must never have violated the Securities Act of 1934.
D)The issuer must have an investment grade rating.
E)The issuer cannot have defaulted on its debt within the past five years.

Question 60

The Green Shoe option is most apt to be exercised when an IPO is ______ and _____.

A)underpriced; oversubscribed
B)underpriced; undersubscribed
C)correctly priced; neither over nor undersubscribed
D)overpriced; oversubscribed
E)overpriced; undersubscribed

Question 61

Monster Truck Company would like to sell 700 shares of stock using the Dutch auction method.The bids received are as follows: Bidder B will receive _____ shares and pay a price per share of ____.Bidder C will receive no allocation.

A)0; $0
B)75; $17
C)100; $17
D)233; $18
E)100; $18

Question 62

Mushroom Veggie Meats would like to sell 3,000 shares of stock using a Dutch auction.The bids received are as follows: What is the total amount the issuer will receive from this auction? Ignore costs.

A)$128,600
B)$126,000
C)$127,400
D)$125,000
E)$129,600

Question 63

Cross Country Movers has just gone public.Under a firm commitment agreement, the firm received $19.84 for each of the 2.12 million shares sold.The initial offering price was $24.40 per share, and the stock rose to $25 per share in the first few minutes of trading.The company paid $626,000 in legal and other direct costs and $105,000 in indirect costs.What was the flotation cost as a percentage of the funds raised?

A)29.91 percent
B)27.85 percent
C)30.49 percent
D)28.24 percent
E)28.60 percent

Question 64

Two companies have both announced IPOs at $16.50 per share.One of these is undervalued by $2, and the other is overvalued by $1.60, but you have no way of knowing which is which.You previously placed an order for 1,000 shares of each issue.If an issue is undervalued, it will be rationed, and only half your order will be filled.What profit do you now expect?

A)-$375
B)-$600
C)$25
D)$150
E)$400

Question 65

Present Tense Tonic wants to raise $13 million to purchase equipment by issuing new securities.Management estimates the issue will cost the firm $875,500 for accounting, legal, and other costs.The underwriting spread is 6.5 percent and the issue price is $24 per share.How many shares of stock must be sold if the firm is to have sufficient funds remaining after costs to purchase all of the desired equipment?

A)608,010 shares
B)521,121 shares
C)618,338 shares
D)647,666 shares
E)582,139 shares

Question 66

High Mountain Gear issued 385,000 shares of stock last week.The underwriters charged a spread of 7.2 percent in exchange for agreeing to a firm commitment.The legal and accounting fees were $302,000.The company incurred $39,000 in indirect costs.The offer price was $17 a share.Within the day of trading, the stock was selling for $18.80 a share.What was the flotation cost as a percentage of the funds raised?

A)31.90 percent
B)35.78 percent
C)32.51 percent
D)26.26 percent
E)29.08 percent

Question 67

Gwen placed an order with her broker to purchase 1,500 shares of each of three IPOs that are being released this month.Each IPO has an offer price of $22 per share.The number of shares allocated to her along with the closing stock price at the end of the first day of trading for each stock, are as follows: What is her total profit or loss on these three stocks as of the end of the first day of trading for each stock?

A)$1,945
B)$4,500
C)$5,145
D)$3,220
E)$2,450

Question 68

Dingo Farms wants to raise $10 million to purchase equipment by issuing new securities.Management estimates the issue will cost the firm $625,500 for accounting, legal, and other costs.The underwriting spread is 8 percent and the issue price is $20 per share.How many shares of stock must be sold if the firm is to have sufficient funds remaining after costs to purchase all of the desired equipment?

A)679,891 shares
B)655,500 shares
C)577,446 shares
D)500,000 shares
E)82,139 shares

Question 69

Deep Hollow Oil issued 135,000 shares of stock last week.The underwriters charged a spread of 8.05 percent in exchange for agreeing to a firm commitment.The legal and accounting fees amounted to $418,000 and the company incurred $48,000 in indirect costs.The offer price was $33 a share.Within the first hour of trading, the stock price increased to $36 a share.What was the flotation cost as a percentage of the funds raised?

A)28.89 percent
B)33.03 percent
C)26.47 percent
D)20.55 percent
E)33.87 percent

Question 70

Global Traders is offering 130,000 shares of stock to the public in a general cash offer.The offer price is $38 a share and the underwriter's spread is 8 percent.The administrative costs are estimated at $865,000.How much will Global Traders receive from this stock offering as net proceeds assuming the issue is completely sold?

A)$3,370,800
B)$3,679,800
C)$4,490,000
D)$4,075,000
E)$3,828,400

Question 71

Leanne Irish Pubworks would like to sell 1,400 shares of stock using the Dutch auction method.The bids received are as follows: Bidder B will receive _____ shares and pay a price per share of _____.

A)884; $31
B)1,400; $27.00
C)455; $28.00
D)455; $29.00
E)700; $38.75

Question 72

Free Trade Partners needs to raise $24.2million to expand its operations into South America.The company will sell new shares of common stock using a general cash offering.The underwriters will charge a spread of 7.6 percent, the administrative costs will be $631,000, and the offer price will be $32 per share.How many shares of stock must be sold if the firm is to raise the funds it desires?

A)748,315 shares
B)839,793 shares
C)911,502 shares
D)989,415 shares
E)1,051,515 shares

Question 73

The Art Works needs to raise $6.2 million for a new facility.Assuming they issue new equity shares via a general cash offering, they expect to incur administrative costs of $412,000 in addition to the underwriting spread of 7.8 percent.If the offer price turns out to be $16 a share, how many shares need to be sold to finance the new facility?

A)448,210 shares
B)454,743 shares
C)406,211 shares
D)405,141 shares
E)487,923 shares

Question 74

Wendy placed an order with her broker to purchase 500 shares of each of three IPOs that are being released this month.Each IPO has an offer price of $23 a share.The number of shares allocated to Wendy, along with the closing stock price at the end of the first day of trading for each stock, are as follows: What is her total profit or loss on these three stocks as of the end of the first day of trading for each stock?

A)$639.50
B)-$369.50
C)-1,050.00
D)$572.00
E)$1,370

Question 75

ALC needs to raise $12 million to finance its expansion into new markets and has decided to sell new shares of equity via a general cash offering.The offer price will be $28 per share, the accounting and legal fees are expected to be $645,000, and the company's underwriters will charge a spread of 8.2 percent.How many shares need to be sold?

A)489,889 shares
B)521,208 shares
C)523,467 shares
D)491,947 shares
E)515,323 shares

Question 76

The Food Network needs to raise $16.8 million to expand its operations nationally.The company will sell new shares of common stock using a general cash offering.The underwriters spread will be 7.85 percent, the administrative costs will be $515,000, and the offer price will be $21 per share.How many shares of stock must be sold for the company to receive the expansion funds it needs?

A)894,763 shares
B)938,311 shares
C)947,222 shares
D)814,141 shares
E)892,674 shares