Chapter 20, Problem 8CQ

Summary Introduction

To explain: The choice of the method of issue and the reason for it.

Bond:

Bond refers to the securities which are traded in the public to raise the capital when needed. It is an investment with a fixed income where an investor gives money to an entity or individual for a specified period of time at a fixed rate.

Underpricing:

The underpricing term refers to the offering of the stocks or the bond at a low price than before. The stocks or the debt are said to be underpriced when they are traded less.

Underwritten Cash offer:

The underwritten cash offer is a method of issuing shares of the company for cash. Under this offer, the company hires investment banker with the help of them the shares is sold. The charges are paid to the investment bankers for this.

Rights Offer:

The rights offer is the offer in which common stock is issued to the existing shareholders. In this offer, the shareholder has issued an option in which a certain number of shares can be bought at a specific price and at a specific duration.