Principles of Corporate Finance
13th Edition
ISBN: 9781260465099
Author: BREALEY, Richard
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Textbook Question
Chapter 15, Problem 13PS
Issue costs In April 2019. Van Dyck Exponents offered 100 shares for sale in an IPO. Half of the shares were sold by the company and the other half by existing shareholders, each of whom sold exactly half of their existing holding. The offering price to the public was $50, and the underwriters received a spread of 7%. The issue was heavily oversubscribed, and on the first day of trading, the stock price rose to $160.
- a. What were the proceeds of the issue to the company? To the shareholders?
- b. How much commission did the underwriters receive?
- c. How much money was left on the table?
- d. What was the cost of the underpricing to the selling shareholders?
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XYZ Corp. has announced that it will take four rights to
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of $35. At the close of business, the day before the ex-
rights day, the company's stock sells for $60 per share.
The next morning, you notice that the stock sells for $53
per share and the rights sell for $6 each. Are the stock
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Describe a transaction in which you could use these
prices to create an immediate profit.
In April 2019, Van Dyck Exponents offered 130 shares for sale in an IPO. Half of the shares were sold by the company and the other half by existing shareholders, each of whom sold exactly half of their existing holding. The offering price to the public was $56 and the underwriters received a spread of 7%. The issue was heavily oversubscribed and on the first day of trading the stock price rose to $151.
a-1. What were the proceeds of the issue to the company?
a-2. What were the proceeds of the issue to the shareholders?
b. How much commission did the underwriters receive?
c. How much money was left on the table?
d. What was the cost of the underpricing to the selling shareholders?
(For all requirements, do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)
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little in 2021 and the price as of Dec 31,2021 was $11. Markets further recovered and on
June 20, 2022 shey sold all shares for $13.
Please provide the necessary journal entries to record the purchase, changes in investment
and sale of their investment, assuming this investment was categorized as FVTPL.
Chapter 15 Solutions
Principles of Corporate Finance
Ch. 15 - Vocabulary Each of the following terms is...Ch. 15 - Prob. 2PSCh. 15 - Vocabulary Here is a further vocabulary quiz....Ch. 15 - Stock issues True or false? a. Venture capitalists...Ch. 15 - Prob. 5PSCh. 15 - Prob. 6PSCh. 15 - Prob. 7PSCh. 15 - Venture capital Complete the passage using the...Ch. 15 - Venture capital a. A signal is credible only if it...Ch. 15 - IPOs Refer to Section 15.1 and the Marvin...
Ch. 15 - Prob. 11PSCh. 15 - Prob. 12PSCh. 15 - Issue costs In April 2019. Van Dyck Exponents...Ch. 15 - Underpricing In same U.K. IPOs, any investor may...Ch. 15 - Prob. 15PSCh. 15 - Prob. 16PSCh. 15 - Underpricing Construct a simple example to show...Ch. 15 - Prob. 18PSCh. 15 - Prob. 19PSCh. 15 - Costs of a general cash offer Why are the costs of...Ch. 15 - Prob. 21PSCh. 15 - Prob. 22PSCh. 15 - Rights issues In 2012, the Pandora Box Company...Ch. 15 - Prob. 24PSCh. 15 - Rights issues vs. cash offers Suppose that instead...Ch. 15 - Private placements You need to choose between...Ch. 15 - Prob. 27PSCh. 15 - Prob. 28PSCh. 15 - Dilution Here is recent financial data on Pisa...
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