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Question 1 (20 marks) a. Jefferson & Westover wanted to raise $55 million dollars capital through a rights offering for the company expansion. The company

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Question 1 (20 marks) a. Jefferson & Westover wanted to raise $55 million dollars capital through a rights offering for the company expansion. The company has determined that the ex-rights price would be $34. The current price is $39 per share, and there are 27 million shares outstanding. What is the subscription price Jefferson & Westover should set, if floatation cost is 7% spread? (15 marks) b. Explain why IPO underpricing is so commonly observed in financial markets

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