1.Cosmax Inc. is going public by issuing common stocks which will sell for $21 per share. If...
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Question:
1.Cosmax Inc. is going public by issuing common stocks which will sell for $21 per share. If the firm needs $350 million in capital for growth and the flotation cost of issuing new stock is 17% of the total value of the issue, how many shares should the company issue?
a. 16.7 million
b. 19.5 million
c. 20.1 million
d. 23.5 million
2. Suppose the Federal Reserve decreases deposits at financial institutions by $10 billion through its open market operations. If the reserve requirement for all deposits is 12%, what is the maximum impact the Fed's actions can have on total deposits (excluding the Fed's injection)?
a. $73.3 billion increase
b. $73.3 billion decrease
c. $83.3 billion decrease
d. $10.0 billion decrease
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