None The Clifford Corporation has announced a rights offer to raise $10million for a new journal, the Journal of Financial Excess. Thisjournal will review potential articles after the author pays anonrefundable reviewing fee of $6,000 per page. The stockcurrently sells for $60 per share, and there are 1 million sharesoutstanding.a. What is the maximum possible subscription price? What is theminimum?b. If the subscription price is set at $50 per share, how many sharesmust be sold? How many rights will it take to buy one share?c. What is the ex-rights price? What is the value of a right?d. A shareholder with 2,000 shares before the offering has nodesire (or money) to buy additional shares offered as rights. Whatis his portfolio value before and after the rights offer?

Step 1: Maximum and Minimum Subscription PriceMaximum Price: The highest price at which the new…

Answered: The Clifford Corporation has announced…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The management of LTTP Corp. is preparing for issuing equity to fund a new project. Rights offeris used. The company has determined that the ex-rights price would be $53. The current price is $58per share, and there are 10 million shares outstanding. The rights offer would raise a total of $45million. What is the subscription price?
Shakee Venture wants to purchase 1,000 shares of an Internet technologystock for $15 a share. She figures that she needs $15,000 plus $90 brokeragecommission to purchase the stock. She currently has $8,000 of liquidity inher money market account.a. What can Shakee borrow on margin in order to make the transaction?b. If the stock jumps to $50 per share within a week, how much will Shakeerealize in profit after paying her broker?c. If the stock dropped to $5 per share, rather than increasing to $50,and the broker put in the margin call, how much must Shakee pay thebroker?d. Based on beginning account balance of $8,000, what is Shakee’s loss?
You own a small networking startup. You have just received an offer to buy your firm from a large, publicly traded firm, JCH Systems. Under the terms of the offer, you will receive 1 million shares of JCH. JCH stock currently trades for $25.38 per share. You can sell the shares of JCH that you will receive in the market at any time. But as part of the offer, JCH also agrees that at the end of one year, it will buy the shares back from you for $25.38 per share if you desire. Suppose the current one-year risk-free rate is 6.23%, the volatility of JCH stock is 30.7%, and JCH does not pay dividends. Round all intermediate values to five decimal places as needed. a. Is this offer worth more than $25.38 million? Explain. b. What is the value of the offer? a. Is this offer worth more than $25.38 million? Explain. (Select the best choice below.) O A. The offer is worth less than $25.38 million because of the put option. O B. The offer is worth more than $25.38 million because of the put…
Marseille Manufacturing (MM) is considering raising money through a rights offering. MM currently has 10 million shares outstanding selling for €20 per share. Current shareholders will receive one right per share. Five rights are required to buy one share for €15. Will the rights be exercised? How much money will MM raise if all rights are exercised? What is the intrinsic value of a right (expected selling price for a single right)?
What is the rate if return? Help
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
You purchase 500 shares of Compucon for $120 per share using a margin account. This transaction requires a 45% percent margin. a. What is the initial margin position? b. Assume the price of Compucon declines to $90 per share. If the minimum maintenance margin requirement is 25% will you receive a margin call? Why? Why not? Explain. c. What is your rate of return? d. Calculate the price that will trigger a margin call.
Jitu
You opened a margin account with borrowing $50,000 from your broker a year ago. Your account started at the initial margin requirement of 50%. With the margin account you bought ABC stock at $50 per share. The maintenance margin is 35%. Today, the stock price falls to $45 per share. Assume interest rate is 10%. What is the margin (your equity) in your account when you first purchase the stock? Will you receive a margin call? (Please consider interest expenses and Show percentage margin after price falls) How low can the price of ABC shares fall before you receive a margin call? Please show both with and without interest expenses. What is your rate of return (Consider Interest Expenses)?
You Invest $3000 by buying 100 shares of Driss Inc at a price of $30 per share. One year from now, Driss pays you a dividend of 40 cents per share. One year later (i.e. two years from now), you get another dividend of 40 cents per share and you immediately sell your shares for $32 each. What return (IRR) did you get on your investment? (Do not round intermediate calculations. Report your result as a percentage. Round the final answers to 2 decimal places. Be careful - Excel's default is to report whole precentage points. Omit the % sign in your response. For example, if your answer is 3.21%, just enter 3.21)
Give typing answer with explanation and conclusion
could you please help me resolve this one? i was confuse how to calculate this one. how do we know the first one is 5700 rather than is 6800? the second one is 800 rather is 700?

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