11. Variance of net daily cash flows is $300,000 The lower cash limit is set at $2,500 Transaction costs are $20 each Rate of return on investments is 9% annually Calculate the upper cash limit per the Miller-Orr model: a. $ 5,131 b. $10,398 e. $ 2,898 d. 7,500 12. If a ten-member board of directors is being selected, how many board members can stockholders elect under the majority voting rule if that group owns 60% of the voting shares? a. 10 b. 6 c. 7 d. 5 13. Why does a firm issue new stock? a. to send a signal b. for dilution--too few shares outstanding c. increase debt/equity ratio e. to raise capital and lower the firm's financial risk An IPO is an: a. investment public offering b. initial public offering c. initial private offering d. investment private offering 14. 15. To value a stock initially going public, which of the following processes would be leased likely to be used as a pricing tool? a. multiply the sum of the past 5 years profit by 10 b. calculate NPV of cash flows c. book value approaclh d. liquidity value approach