Trumpoff Ltd has 60 million shares on issue with a current market share price of $4.50 per share. The company raises $20 million by placing 5 million shares at $4.00 each to a group of financial institutions that previously held no shares in the firm. As a result of this private placement,

a) existing (pre-placement) shareholders have their voting power diluted.

b) there is a transfer of wealth from new shareholders to existing shareholders.

c) the wealth of existing shareholders is expected to drop from $270 million to $250 million (to the nearest $m).

Group of answer choices

1. b) only

2. a) only

3. c) only

4. Both a) and c)

5. All of a), b) and c)