Question 4 a. Explain why the return required by ordinary shareholders is different from the return required by bondholders. b. Jasmine plc is a service company that has been listed for six years. It has been advised that its proposed 1 for 4 rights issue should be at a 15% discount to its current ordinary share price of GHC4.20. The proposed rights issue is for GHC3M to expand existing business activities. i. Mr. Oprempong is a small investor who owns 10000 shares of Jasmine plc. Using the information provided discuss the effect of the proposed rights issue on the personal wealth of Mr. Obrempong. ii. Critically discuss the factors to be considered by Jasmine plc in using a right issue as a way of raising new equity finance. Your answer should include a discussion of the following points: - the difference between actual and theoretical ex-rights price - other ways in which Jasmine plc could raise the new equity finance. c. Discuss briefly the key features of bonds such as debentures and ordinary loan stock d. Briefly outline the advantages and disadvantages to a company of issuing convertible bonds e. What is the gearing effect of warrants f. Explain the meaning of the following terms and examined the circumstances under which their issue would be beneficial to (i) lenders (ii) borrowers i. Deep discount bonds ii. Zero coupon bonds iii. Warrants iv. Convertible bonds g. What are the advantages and disadvantages to a company of raising finance via Eurobonds h. Discuss the reasons for the popularity of leasing as a source of finace. Question 4 a. Explain why the return required by ordinary shareholders is different from the return required by bondholders. b. Jasmine plc is a service company that has been listed for six years. It has been advised that its proposed 1 for 4 rights issue should be at a 15% discount to its current ordinary share price of GHC4.20. The proposed rights issue is for GHC3M to expand existing business activities. i. Mr. Oprempong is a small investor who owns 10000 shares of Jasmine plc. Using the information provided discuss the effect of the proposed rights issue on the personal wealth of Mr. Obrempong. ii. Critically discuss the factors to be considered by Jasmine plc in using a right issue as a way of raising new equity finance. Your answer should include a discussion of the following points: - the difference between actual and theoretical ex-rights price - other ways in which Jasmine plc could raise the new equity finance. c. Discuss briefly the key features of bonds such as debentures and ordinary loan stock d. Briefly outline the advantages and disadvantages to a company of issuing convertible bonds e. What is the gearing effect of warrants f. Explain the meaning of the following terms and examined the circumstances under which their issue would be beneficial to (i) lenders (ii) borrowers i. Deep discount bonds ii. Zero coupon bonds iii. Warrants iv. Convertible bonds g. What are the advantages and disadvantages to a company of raising finance via Eurobonds h. Discuss the reasons for the popularity of leasing as a source of finace