Question
1) Thursday's N' More wants to raise $1 million through a rights offering to renovate its current facilities. The subscription price for the offering is
1) Thursday's N' More wants to raise $1 million through a rights offering to renovate its current facilities. The subscription price for the offering is set at $25 a share. Currently, the company has 90,000 shares of stock outstanding at a market price of $29 a share. Each shareholder will receive one right for each share of stock they own. How many rights will be needed to purchase one new share of stock in this offering? A. 2.25 rights B. 2.50 rights C. 2.61 rights D. 2.90 rights E. 4.00 rights
2) The BB Drum Co. recently raised several million dollars in an initial public offering. BB received $22 per share from the underwriter, the offering price was $25 per share, and the market price rose to $28 on the first day of trading. The spread paid by BB was _______. A. 12.0% B. 13.6% C. 24.0% D. 27.3% E. 28.0%
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