1.) LaJolla Securities Inc. specializes in the underwriting of small companies. The terms of a recent offering were as follows:

Number of shares	2 million
Offering price	$25 per share
Net proceeds	$45 million

LaJolla Securities' expenses associated with the offering were $500,000. Determine LaJolla Securities' profit on the offering if the secondary market price of the shares immediately after the offering began were as follows:

a.) $22 Per share = ________ million

b.) $25 Per Share =_________ million

c.) $30 Per Share = _________ Million

2.) After a banner year of rising profits and positive stock returns, the managers of Raptor Pharmaceuticals Corporation (RPC) have decided to launch a seasoned equity offering to raise new equity capital. RPC currently has 15 million shares outstanding, and yesterday's closing market price was $60.00 per RPC share. The company plans to sell 1 million newly issued shares in its seasoned offering. The investment banking firm Robbum and Blindum (R&B) has agreed to underwrite the new stock issue for a 3.5% discount from the offering price, which RPC and R&B have agreed should be $0.20 per share lower than RPC's closing price the day before the offering is sold.

a.) What is likely to happen to RPC's stock price when the plan for this seasoned offering is publicly announced (Mention that seasoned equity issue announcements usually cause the stock price to fall by about 3 percent)? RPC's announcement of its planned offering would cause the stock price to Increase/Decrease from $_____ to $______

b.) Assuming that RPC's stock price closes at $58.20 per share the day before the seasoned offering is launched, what net proceeds will RPC receive from this offering?

c.) Calculate the return earned by RPC's existing stockholders on their shares from the time before the seasoned offering was announced until it was actually sold for $58.20 per share. Round your answer to two decimal places.

d.) Calculate the total cost of the seasoned equity offering to RPC's existing stockholders as a percentage of the offering proceeds. Round your answer to two decimal places.

3.) Assume that the Rome Electricity Company (REC) wishes to create a sponsored ADR program worth $300 million to trade its shares on the New York Stock Exchange. Also assume that REC is currently selling on the Borsa Italiana (the Italian Stock Exchange, in Milan) for 29 per share and that the current dollar/euro exchange rate is $1.23/. American Bank and Trust (ABT) is handling the ADR issue for REC and has advised REC that the ideal trading price for utility company shares on the NYSE is about $71.34 per share (or per ADR).

a.) Assume that REC's stock price rises from 29 to 35 per share. If the exchange rate does not also change, what will happen to REC's ADR price? $_______/ADR

b.) If the euro appreciates from $1.23/ to $1.31/ but the price of REC's shares remains unchanged in euros, what will happen to REC's ADR price? $_______/ADR