Fin_3000 problem 4

ABC has 1 million shares outstanding, each of which has a price of $24. It has made a takeover offer of XYZ Corporation which has 1 million shares outstanding, and a price per share of $2.39. Assume that the takeover will occur with certainty and all market participants know this. Furthermore, there are no synergies to merging the two firms. a. Assume ABC made a cash offer to purchase XYZ for $5.04 million. What happens to the price of ABC and XYZ on the announcement? What premium over the current market price does this offer represent? b. Assume ABC makes a stock offer with an exchange ratio of 0.21. What happens to the price of ABC and XYZ this time? What premium over the current market price does this offer represent? c. At current market prices, both offers are offers to purchase XYZ for $5.04 million. Does that mean that your answers to parts (a) and (b) must be identical? Explain. a. Assume ABC made a cash offer to purchase XYZ for $5.04 million. What happens to the price of ABC…

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Question # 2:            Which of the following statements is CORRECT? a. If Apple issues additional shares of common stock through an investment banker, this would be a secondary market transaction. b. If you purchased 100 shares of Apple stock from your sister-in-law, this would be an example of a primary market transaction. c. The IPO market is an example of a primary market. d. Question # 3:    Which of the following statements is CORRECT? a. Capital market instruments include both long-term debt and common stocks. b. An example of a primary market transaction would be your uncle transferring 100 shares of Wal-Mart stock to you as a birthday gift. c. The NYSE does not exist as a physical location; rather, it represents a loose collection of dealers who trade stocks electronically. d. If your uncle in New York sold 100 shares of Microsoft through his broker to an investor in Los Angeles, this would be a primary market transaction.…

NEED ALL QUEST.... You would like to purchase one ClassA share of Berkshire Hathaway through your TD Ameritrade brokerage account. TD Ameritrade advertises a $5 commission for trades using their​ phone-based interactive voice response system. You call and learn that the bid price is ​$285,705.59 and the asking price is $285,909.62​ , and you submit your order for one share.   a. The current​ bid/ask spread for Berkshire Hathaway Class A shares is ​$________ ​(Round to the nearest​ cent.)   b. If TD Ameritrade routes your buy order to the​ NYSE, the potential minimum for your total transaction costs is $________ ​(Round to the nearest​ dollar.)   c. If TD Ameritradevroutes your buy order to​ NASDAQ, the potential maximum for your total transaction costs is $________ ​(Round to the nearest​ cent.)   d. Regardless of how your trade is​ executed, based on the​ bid/ask spread, the market value of your trade is $________ ​(Round to the nearest​ cent.)

Please explain the solution to this general accounting problem with accurate explanations.

Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding. Firm B Firm T Shares outstanding 4,600 1,000 Price per share $ 40 $ 14 Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $8,800. If Firm T is willing to be acquired for $16 per share in cash, what is the NPV of the a. merger? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) What will the price per share of the merged firm be assuming the conditions in b. (a)? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) If Firm T is willing to be acquired for $16 per share in cash, what is the merger c. premium? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) d. Suppose Firm T is agreeable to a merger by an exchange of stock. If B offers one of its shares for…

Upvote will be given. Write the complete solutions legibly. The encircled letter is the correct answer. Solve it manually. Answer 27, 28 and 29

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Question # 2:            Which of the following statements is CORRECT? a. If Apple issues additional shares of common stock through an investment banker, this would be a secondary market transaction. b. If you purchased 100 shares of Apple stock from your sister-in-law, this would be an example of a primary market transaction. c. The IPO market is an example of a primary market. d. None of the above.

(a) Describe what it means if a new company decides to issue its ordinary shares to investors in instalments, and why they might sell shares this way.       (b) John’s Building Company needs to raise $100,000 cash from share investors and asks for your advice for designing the sale of the shares. He wants to sell ordinary shares.              First, use your imagination to determine a reasonable sale price per share.       Then, design a traditional 3 step instalment plan for collection of the cash from investors.       Hint: you may consider that the Application period will commence on 1st February 2022.       Outline the basic details of your plan, including beginning and ending dates for each stage of your plan.

There is an option involved strategy named “Ratio call writing”. It is the strategy when one owns a certain number of shares of the underlying stock and simultaneously sells calls against more shares than one owns. Therefore, there is a ratio of calls written to stock owned. The most common ratio is the 2:1. For example a 2:1 ratio can be established by buying 100 shares of ABC at $49 per share and selling 200 ABC October 50 calls at $6. What is the profit/loss of the above “ratio call writing” strategy when stock price at October expiration is $37, $45 and $63, respectively?

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Can you please answer this accounting question ?

The Peter Corporation and the Sellers Company have both announced IPOs. You place an order for 1,250 shares of each IPO. One of the IPOs is underpriced by $15.50 and the other is overpriced by $8.25. If you could get all of the shares you ordered for each IPO, what would your profit be?   Multiple Choice $9,062.50 $7,552.00 $19,375.00 $8,307.25 $29,687.50     The Bert Corporation and Ernie, Incorporated, have both announced IPOs. You place an order for 550 shares of each IPO. One of the IPOs is underpriced by $15.00 and the other is overpriced by $5.75. You will receive all of the shares you ordered of the overpriced IPO, but only one-half of the shares you ordered of the underpriced IPO. What profit do you expect?   Multiple Choice $5,087.50 $4,125.00 $3,332.25 $962.50 $11,412.50     Gravity Company needs to raise $49 million to fund its expansion plans. The company will sell shares at a price of $28.20 in a general cash offer and the…

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Answer need for part 3) only. Thank you! ABC Trading wants to raise equity to fund an acquisition of a small company (XYZ). ABC is considering two choices: (i) using an underwriting syndicate, (ii) a rights offering. The price of ABC stock is $60 and there are 250 million shares outstanding. 1) If ABC agrees to pay 3% to an underwriter to issue the stock, what are the net proceeds to the company if it sells 20 million shares to the public for $60 each? 2) ABC issues a rights offer to its existing stockholders that lets them purchase stock at the price of $58 each. (Note: stockholders will receive one right for each 12.5 shares they own, so only 20 million shares can be issued). What are the net proceeds to the company if it sells 20 million shares using the rights offering? 3) What is the market value of the firm in (a), (b) (ignoring information effects)?