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NEW QUESTION 53
A company wishes to raise new finance using a rights issue. The following data applies:
* There are 10 million shares in issue with a market value of $4 each
* The terms of the rights will be 1 new share for 4 existing shares held
* After the rights issue, the theoretical ex-rights price (TERP) will be $3.80 Assuming all shareholders take up their rights, how much new finance will be raised ?
Give your answer to one decimal place.

Answer:

Explanation:
$ ? million
7.5, 7.50

 

NEW QUESTION 54
Z wishes to borrow at a floating rate and has been told that it can use swaps to reduce the effective interest rate it pays. Z can borrow floating at Libor ' 1, and fixed at 10%.
Which of the following companies would be the most appropriate for Z to enter into a swap with?

A. Company E - it can borrow floating at L +1 1/2 and fixed at 12%B. Company A - it can borrow floating L +1 1/2 and fixed at 9.5%C. Company D - it can borrow at L +1 1/2 and fixed at 10.5%D. Company C - it can borrow at L +1 1/2 and fixed at 9%

Answer: D

 

NEW QUESTION 55
Company WWW is considering making a takeover bid for Company KKA Company KKA's current share price is $5.00
Company WWW is considering either
" A cash payment of $5.75 for each share in Company KKA
" A 5 year corporate bond with a market value of $90 in exchange for 15 shares in Company KKA
Calculate the highest percentage premium which Company KKA shareholders will receive.

A. Corporate bond premium = 80%B. Cash premium = 10%C. Cash premium = 15%D. Corporate bond premium = 20%

Answer: D

 

NEW QUESTION 56
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