21)

Solution Tech has decided to raise $35.85 million in additional funding via a rights offering. The firm will issue one right for each share of stock outstanding. The offering consists of a total of 860,000 new shares. The current market price of the stock is $45. Currently, there are 6.88 million shares outstanding. What is the offer price of each new share?

Select one:

a. $41.69

b. $33.98

c. $45.41

d. $93.65

22)

Which of the following has not been the reason(s) of IPO rejection by Securities Commission (SC) in Malaysia?

Select one:

a. The IPO applicant did not comply with the profit track record

b. Poor corporate governance displayed by the directors of the IPO applicant

c. The IPO applicant was operating in a highly competitive market

d. Board of directors of the IPO applicant consists of mainly independent directors

23)

Anne Bakery Enterprise is downsizing. The company paid a $3.50 annual dividend last year. The company has announced plans to lower the dividend by 25 percent each year. Once the dividend amount becomes zero, the company will cease all dividends and go out of business. You have a required rate of return of 15.5 percent on this particular stock given the company's situation. The fair price per share worth today is closest to:

Select one:

a. $18.75

b. $20.68

c. $6.48

d. $5.19

24)

Which of the following is true?

Select one:

a. 'Nominal cash flows to be discounted at nominal rate and real cash flows to be discounted at real rate' approach may not necessarily provide the same NPV for a project if the interest rates are volatile in the market.

b. Failure to consider cannibalization may result in understated NPV for a project.

c. Using Equivalent Annual Annuity approach will not be able to provide a more accurate NPV compared to the common life approach.

d. 'Risk classification' is a scientific approach to help corporation to estimate an appropriate discount rate for a project.

25)

Which of the following is the least likely description of IPO underpricing?

Select one:

a. Underpricing is to intentionally leave money on the table

b. Underpricing is to substitute for costly marketing expenditures

c. Underpricing is to overcome the underperformance of IPO

d. Underpricing is to deter lower quality issuers from imitating