Security Issuance

1. Galathon requires a new equity. The current market price per share is $17.45. It decides to raise additional funds by offering the right to buy new shares for 15 at $13.20 per share. With 100% subscription, what is value of each right?
2. Regarding an IPO, what is Underpricing, and how can it be measured?

Debt or Equity Financing

Recently you have been invited to the board meeting where the main point on the agenda ist o make the decision whether company should issue new stocks or write some new bonds to finace the outstanding projects that is considered tob e profitable in the future and has a strong support among board members. You need to explain and suggest to what extend should the firm use debt rather than equity financing.