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83. What is the primary reason for a reduction in share value after a successful rights issue?
The new shares:
84. A rights issue offers the firm's shareholders one new share of stock at $40 for every three
shares of stock they currently own. What should be the stock price after the rights issue if the
stock sells for $80 per share before the issue?
85. Shelf registration allows firms to:
86. Which one of the following statements is generally true concerning the costs of issuing
securities?
87. Some investors believe that the decision by management to issue equity as opposed to
issuing debt is a signal that:
88. Which one of these types of financing is most apt to provide investors with only sample
products?
89. A private placement avoids which one of the following costs?
90. A private placement of securities involves:
91. Which one of the following methods may be particularly cost-effective to smaller issuers
of securities?
92. When a new issue goes wrong and the stock price immediately crashes once trading
commences, the IPO investors are most apt to:
93. If an investor can earn 20% on underpriced IPOs, but will lose 10% on overpriced IPOs in
which he was awarded $2,000 worth of shares, how much of the underpriced issue must he be
awarded in order to gain $500 total?
94. An IPO was priced to sell at $23 a share and closed at $22 a share at the end of the first
day of trading. The underwriting spread was 7% of the offer price and the legal, accounting and
administrative costs were $1.6 million. What was the total percentage cost of the issue as a
percentage of the market value at the end of the first day if 250,000 shares were offered?
95. Which one of the following is
not
an advantage of shelf registration?
96. Second stage financing:
97. Firms go public primarily to:
98. In a firm commitment, the underwriter:
99. Those subject to the winner's curse are:
100. Plasti-tech Inc. has decided to go public and has sold 2 million of its shares to its
underwriter for $20 per share. The underwriter then sold them to the public for $22 each. Plasti-
tech also encountered $0.5 million in administrative fees. Soon after the issue, the stock price
rose to $25. Find Plasti-tech Inc.'s total cost of this issue.
101. In regard to new issues of common stock, economists have found that the announcement
of a new issue:
102. Currently, M & S Inc. has 2 million shares outstanding selling at $70 a share. A rights
issue will be made that allows 1 share to be purchased for every 5 shares currently held by
stockholders for $40 each. Which one of the following is true?
