Reference no: EM132584793

Question 1: What does it mean to say that financing is a zero-NPV transaction?

Question 2: What are recent trends in a firm's use of different sources of finance?

Question 3: Disregarding issues of risk and return, why might it be important to shareholders and management alike as to what class of equity is issued (e.g., common, preferred, etc.)?

Question 4: What conflicts of interest can arise between managers and stockholders?

Question 5: What is a shelf registration? Why would a public firm want to issue securities using a shelf registration?

Question 6: Detail the difference between a prospectus and a red herring prospectus?

Question 7: What are the advantages and disadvantages to a new or small firm of getting capital funding from a venture capital firm?

Question 8: Tetus Corporation went public with an initial public offering of 2.5 million shares of stock. The underwriter used a firm commitment offering in which the net proceeds was $8.05 per share and the underwriter's spread was 8% of the gross proceeds. Tetus also paid legal and other administrative costs of $250,000 for the IPO. Calculate the gross proceeds and the total funds received from the sale of the 2.5 million shares of stock.

Question 9: Ying Corporation, Inc. plans to issue 10 million additional shares of its stock. The investment bank recommends net proceeds of $19.90 per share and will charge an underwriter's spread of 5.5% of the gross proceeds. In addition, Ying Corporation must pay $2 million in legal and other administrative expenses. Calculate the gross proceeds and the total funds received by Ying Corporation from the sale of the 10 million shares of stock.