1. Explain the difference between a competitive and negotiated cash sale. Which method of sale is likely to yield the lowest funding cost for firms selling plain vanilla bonds in stable markets?

2. On August 19, 2004, Google completed its I.P.O. of 19.6 million shares to the initial investors at $85.00 per share. The closing price of the stock that same day was $100.34. What was the dollar value of the underpricing associated with the Google I.P.O.?

3. Suppose that a biotech firm in Pittsburgh raised $120 million in an I.P.O. The firm received $23 per share, and the stock sold to the public for $25 per share. The firms legal fees, S.E.C. registration fees, and other out-of-pocket costs were $270,000. The firms stock price increased 17.5% on the first day. What was the total cost to the firm of issuing the securities?

4. A firm is making an initial public offering. The investment bankers agree to a firm underwriting commitment for 500,000 shares that would be priced to the public at $36 a share. The underwriters spread is 7%. What were the proceeds for the issuer and the underwriter?

5. Hilton Worldwide Holdings, Inc. completed an initial public offering on December 12, 2013. The offer price was $20.00 per share and the closing price at the end of the first day was $21.50. The firm issued 117.6 million shares. What was the loss to Hilton due to underpricing?

6. Crossler Automobiles sells autos in a market where the standard auto comes with a 10 year, 100,000 mile warranty on parts and labor. Describe how an increased probability of bankruptcy could affect sales of autos by Crossler?

7. Legitron Corporation has $350 million in outstanding debt at an interest rate of 9%. What is the dollar value of the tax shield on that debt for the current year? The tax rate is 35%.