Kahuku Corporation has 100 million shares outstanding trading at $20 per share. The company announces its intention
Fantastic news! We've Found the answer you've been seeking!
Question:
Kahuku Corporation has 100 million shares outstanding trading at $20 per share. The company announces its intention to raise $150 million by selling new shares.
a). What do market signaling studies suggest will happen to Kahuku’s stock price on the announcement date? Why?
b). How large a gain or loss in aggregate dollar terms do market signaling studies suggest existing Kahuku shareholders will experience on the announcement date?
c). What percentage of the value of Kahuku’s existing equity prior to the announcement is this expected gain or loss?
d). At what price should Kahuku expect its existing shares to sell immediately after the announcement?
Related Book For
Posted Date: