Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
4th Edition
ISBN: 9780134083278
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
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Chapter 23.2, Problem 1CC
Summary Introduction
To determine: The main advantages and disadvantages of going public.
Introduction: Initial Public Offering (IPO) is a process where a company sells its share publically on the open market for the first time.
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California Construction Inc. is considering a 15 percent stock dividend. The capital accounts are: Common stock (6,000,000 shares at $10 par) ....... $60,000,000 Capital in excess of par* ...................................... 35,000,000 Retained earnings ................................................ 75,000,000 Net worth ......................................................... $170,000,000 *The increase in capital in excess of par as a result of a stock dividend is equal to the shares created times (Market price – Par value).
The company’s stock is selling for $32 per share. The company had total earnings of $19,200,000 with 6,000,000 shares outstanding and earnings per share were $3.20. The firm has a P/E ratio of 10.
a. Show the new capital accounts if a 15 percent stock dividend is given.
b. What adjustments would be made to EPS and the stock price? (Assume the P/E ratio remains constant.)
c. How many shares would an investor have if they originally had 80 shares?
d. What…
Refer to Table 10–6.
Price quotes are stated in 1/64ths.
What was the closing price of a May 3,990 call option on the S&P 500 Stock Index futures contract on January 13, 2023?
Round your closing price answer to 1 decimal place and dollar price answer to the nearest whole number.
TABLE 10-6 Option Quotes, January 13, 2023
Underlying Asset: S&P 500 Index (SPX)
Closing Value: 3,999.09
Expiration
Strike Price
Calls
Puts
Last
Volume
Open Interest
Last
Volume
Open Interest
04-21-23
3990
140
0
258
164.6
0
223
04-21-23
4010
164.3
257
18,244
144.3
100
17,166
05-19-23
3990
200.7
210
30
169.1
210
52
05-19-23
4010
186.1
303
3,552
279.2
2
3,965
06-16-23
3990
223.3
1
16
178.8
1
1
06-16-23
4010
152.9
0
46
183
1,665
42,159
12-15-23
3975
361
100
2,555
250.1
32
2,438
12-15-23
4025
349.3
0
2,416
268.2
4
2,149
OPTIONS ON INTEREST RATE FUTURES
Underlying Asset: March 2023 30-Year Treasury Bond Future
Prior Settle: 130'02
Expiration
Strike Price
Calls
Puts…
Chapter 23 Solutions
Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
Ch. 23.1 - Prob. 1CCCh. 23.1 - Prob. 2CCCh. 23.2 - Prob. 1CCCh. 23.2 - Prob. 2CCCh. 23.3 - List and discuss four characteristics about IPOs...Ch. 23.3 - Prob. 2CCCh. 23.4 - Prob. 1CCCh. 23.4 - What is the average stock price reaction to an...Ch. 23 - Prob. 1PCh. 23 - What are the advantages and the disadvantages to a...
Ch. 23 - Prob. 3PCh. 23 - Suppose venture capital firm GSB partners raised...Ch. 23 - Prob. 5PCh. 23 - Prob. 6PCh. 23 - Prob. 7PCh. 23 - Prob. 8PCh. 23 - Prob. 9PCh. 23 - Prob. 10PCh. 23 - Prob. 11PCh. 23 - Prob. 12PCh. 23 - What is IPO underpricing? If you decide to try to...Ch. 23 - Prob. 14PCh. 23 - Prob. 15PCh. 23 - Prob. 16PCh. 23 - Prob. 17PCh. 23 - Prob. 18PCh. 23 - Prob. 19PCh. 23 - Prob. 20P
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