1

a)ABC Industries is launching a new range of products and needs to raise $13.764million (net of underwriting cost) to fund an expansion. If the offer price is $4 and the underwriters require an 7 per cent spread on the transaction, how many shares does the company need to issue (in millions to three decimal places)? (Hint: required amount/(1-spread) = amount net of fees)

a. 3.700

b. 15.914

c. 3.738

d. 3.720

b)BBB ltd issues an IPO sold on a stand-by underwriting basis. The company's investment bank demands a spread of 6 per cent of theoffer price.4 million shares are issued. If the net proceeds to the issuer were $10.8288 million, what was the per share price at which the shares were sold? (in dollars to the nearest cent; don't use $ sign)

c)Which one of the following statements is NOT true?

Select one:

A. For many smaller companies and companies of lower credit standing that have limited access, or no access, to the public markets, the cheapest source of external funding are often private markets.

B. Bootstrapping and venture capital financing are not part of the private market.

C. Bootstrapping and venture capital financing are part of the private market.

D. Many private companies that are owned by entrepreneurs, families, or family foundations and are sizeable companies of high credit quality prefer to sell their securities in the private markets.

d)Tactics that venture capitalists use to reduce the risk of their investment include:

Select one:

A. funding the ventures in stages, requiring entrepreneurs to make no personal investments, syndicating investments, and maintaining in-depth knowledge about the industry in which they specialise.

B. funding the ventures completely in the beginning, requiring entrepreneurs to make personal investments, syndicating investments, and maintaining in-depth knowledge about the industry in which they specialise.

C. funding the ventures in stages, requiring entrepreneurs to make personal investments, syndicating investments, and maintaining in-depth knowledge about the industry in which they specialise.

D. None of the above.