Plasteel Devices has 100 million shares outstanding trading at $5 a share. The company announces its intention to raise $50 million by selling new shares.

a. What do market-signaling studies suggest will happen to Plasteel's stock price on the announcement date? Why?

b. How large a gain or loss, in aggregate dollar terms, do market- signaling studies suggest existing Plasteel shareholders will experience on the announcement date?

c. What percentage of the amount of money Plasteel intends to raise is this expected gain or loss?

d. What percentage of the value of Plasteel's existing equity prior to the announcement is this expected gain or loss?

e. At what price should Plasteel expect its existing shares to sell immediately after the announcement?

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