Are existing capital structures necessarily optimal

Reference no: EM131241604

1. Are existing capital structures necessarily optimal?

2. How can managers reduce the likelihood that they will run out of cash?

3. How does a coercive bond exchange offer work?

4. How could a coercive seasoned equity rights offering work?

5. Assume that there is a rights offering for a firm that is worth $500 million and that offers its shareholders the right to buy 1 extra share for each share they already own. The "discount" price for the new shares is 1/5 the price of the current shares. Assume that half the investors do not participate.

What is the loss to nonparticipating investors (shares) and the gain to participating investors (shares)?

Reference no: EM131241604

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