Question: QUESTION 4 (15 Marks) [CLO 4] Explain i n your own words, the differences between direct placement, public offering and rights offering of securities? (3

QUESTION 4 (15 Marks) [CLO 4]

  1. Explain in your own words, the differences between direct placement, public offering and rights offering of securities? (3 Marks)

  1. General Cereals common stock dividends have been growing at an annual rate of 7% per year over the past 10 years. Current dividends are $1.70 per share. The investor requires a 12% rate of return.
  1. What is the current value of a share? (3 marks)

  1. Cascade Mining Company expects its earnings and dividends to increase by 7% per year over the next 6 years and then to remain relatively constant thereafter. The firm currently (that is, as of year 0) pays a dividend of $5 per share.

Determine the value of a share of Cascade stock to an investor with a 12% required rate of return.(9 Marks)

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