Question
Atlanta Ltd. has 40 million shares on issue with a current market share price of $5 per share. The company raises $15 million by placing
Atlanta Ltd. has 40 million shares on issue with a current market share price of $5 per share. The company raises $15 million by placing 5 million shares at $3 each to a group of financial institutions that previously held no shares in the firm. As a result of this private placement, Group of answer choices(a) Old shareholders have their voting power diluted. (b) There is a transfer of wealth from new shareholders to old shareholders. (c) Old shareholders wealth is expected to drop from $200 million to $180 million (to the nearest million dollars). (d) Both (a) and (c) (e) All of (a), (b), and (c)
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