Todd Winningham IV has $4,500 to invest. Todd owns shares of Gallagher Tennis Clubs Inc. Gallagher has issued a rights offering to itscommon shareholders. Five rights plus $44 cash will buy one new share. Gallagher's stock is selling for $59 ex-rights.a-1. How many rights could Todd buy with his $4,500?Number of rights1500a-2. Alternatively, how many shares could he buy with the same $4,500 at $59 per share? (Round the final answer to the nearestwhole number.)Number of shares76b. If Todd invests his $4,500 in Gallagher rights and the price of Gallagher stock rises to $65 per share ex-rights, what would be hisdollar profit on the rights? (First compute profits per right.) (Do not round intermediate calculations.)Dollar profit$ 1800c. If Todd invests his $4,500 in Gallagher shares and the price of a share rises to $65 per share ex-rights, what would be his total dollarprofit? (Round intermediate calculations.)Total dollar profit $ 456d. What would be the answer to part b if the price of a Gallagher share price falls to $36 per share ex-rights instead of rising to $65?(Negative answer should be indicated by a minus sign.)Dollar profit / loss on the rights$

Right issue is one of easy and cheap method to raise money for company by selling additional shares…

Answered: Todd Winningham IV has $4,500 to…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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"Jen owns 5,500 of the 350,000 shares of TC Inc. The company has just announced a rights offering whereby 40,000 shares are being offered at a subscription price of $12 a share. The current stock price is $16 a share. Assume she sells her rights and that all rights are exercised. What percentage of the firm will she own after the rights offering?" 14.10 percent 1.35 percent 0.86 percent 0.75 percent 1.27 percent
The Andersons own two shares of Magic Tricks Corporation’s common stock. The market value of the stock is $58. The Andersons also have $46 in cash. They have just received word of a rights offering. One new share of stock can be purchased at $46 for each two shares currently owned (based on two rights).What is the value of a right?What is the value of the Andersons’ portfolio before the rights offering? (Portfolio in this question represents stock plus cash.)If the Andersons participate in the rights offering, what will be the value of their portfolio, based on the diluted value (ex-rights) of the stock?If they sell their two rights but keep their stock at its diluted value and hold onto their cash, what will be the value of their portfolio?
! Required information [The following information applies to the questions displayed below.] Haven received 200 NQOs (each option gives him the right to purchase 20 shares of Barlow Corporation stock for $7 per share) at the time he started working for Barlow Corporation three years ago when its stock price was $7 per share. Now that Barlow's share price is $50 per share, he intends to exercise all of his options. After acquiring the 4,000 Barlow shares with his options, he intends to hold the shares for more than one year and then sell the shares when the price reaches $75 per share. (Leave no answer blank. Enter zero if applicable. Input all amounts as positive values.) b. What are the cash flow effects for Barlow Corporation resulting from Haven's option exercise? How would it change if Barlow's marginal rate were 0 percent? Date Tax benefit on grant date Tax benefit in year of exercise Tax benefit in year of sale Tax benefit when tax rate is 0% Amount
Assume that an investor short-sells 600 shares of stock at a price of $45 a share, making a 50 percent margin deposit. A year later, she repurchases the borrowed shares at $30 a share. How much of her money did the short-seller have to put up to make this transaction?$ How much money did the investor make, or lose, on this transaction? Ignore margin interest.$ What rate of return did she make on her invested capital (see part a)? Ignore margin interest. Round the answer to two decimal places. %
Jen owns 7,500 of the 480,000 shares of TC Inc. The company has just announced a rights offering whereby 75,000 shares are being offered at a subscription price of $12 a share. The current stock price is $16 a share. Assume she sells her rights and that all rights are exercised. What percentage of the firm will she own after the rights offering? Multiple Choice O 1.35 percent 86 percent 1.00 percent 1.27 percent 75 percent
Required information [The following information applies to the questions displayed below.] Yost received 300 NQOs (each option gives Yost the right to purchase 10 shares of Cutter Corporation stock for $15 per share). At the time he started working for Cutter Corporation three years ago, Cutter's stock price was $15 per share. Yost exercised all of his options when the share price was $26 per share. Two years after acquiring the shares, he sold them at $47 per share. Note: Input all amounts as positive values. Leave no answer blank. Enter zero if applicable. b. What are Cutter Corporation's tax consequences (amount of deduction and tax savings from deduction) on the grant date, the exercise date, and the date Yost sold the shares? X Answer is complete but not entirely correct. Amount of Deduction Grant date Exercise date Sale date $ $ $ 0 $ 2,700 × $ 0 Tax Savings 0 693 0
Maggie owns 100 shares of FloorMart, Inc. The firm pays a semi-annual dividend of $0.75 per share and offers the option to reinvest the cash dividends into additional shares of company stock. If the stock is selling for $55.00 per share, how many shares of stock will Maggie receive each dividend period if she chooses the dividend reinvestment plan?
The company's stock was trading at $15 per share when Michelle recived a stock option grant of 3,000 shares. Assume all the shares vested at once when the stock price was $27 per share. On the day the shares vested, Michelle exercised her options and sold all the shares. How much did Michelle earn as a result?
16. ABC bought 100 common shares of XYZ. The price paid was $ 40, per share, plus he paid $ 280 in brokerage costs. The entry to register this purchase includes: Select one: a. debit to cash for $ 4,000. b. Debit to Investment in shares of $ 4,000. c. Debit to Investment in shares for $ 4,280. d. debit to brokerage expense of $ 280 and a debit to investment in shares of $ 4,000.
Joe wants to buy 120 shares of Company X at S50 per share using a margin account. The brokers initial margin requirement is 45%. Calculate the amount of money Joe must initially invest. (Note: Input your answer in XX format, e.g., 1000; round it to the nearest integer if an exact decimal answer is not available.)
Peter Gunderson bought 2,000 shares of stock in a transportation company at $45.10 per share. Ten months later he sold the stock at $78.22 per share. If he had to pay his broker a commission of $85, how much profit did Peter make on this investment? Round your answer to the nearest dollar.
J1.

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