Student name:
1) The Peter Corporation and the Sellers Company have both announced IPOs. You place
anorder for 1,200 shares of each IPO. One of the IPOs is underpriced by $15.25 and the other is
overpriced by $8.00. If you could get all of the shares you ordered for each IPO, what would
your profit be?
1)
A) $18,300.00
B) $27,900.00
C) $7,975.00
D) $7,250.00
E) $8,700.00
Question Details
Difficulty : 1 Basic
Topic : Initial public offerings
Learning Objective : 15-03 Define initial public offerings and some of the costs of going public.
AACSB : Analytical Thinking
Bloom's : Understand
Section : 15.5 IPOs and Underpricing
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
2) The Bert Corporation and Ernie, Incorporated, have both announced IPOs. You place
anorder for 750 shares of each IPO. One of the IPOs is underpriced by $16.00 and the other is
overpriced by $6.75. You will receive all of the shares you ordered of the overpriced IPO, but
only one-half of the shares you ordered of the underpriced IPO. What profit do you expect?
2)
A) $6,937.50
B) $937.50
C) $5,781.25
D) $17,062.50
E) $6,000.00
,Question Details
Difficulty : 1 Basic
Topic : Initial public offerings
Learning Objective : 15-03 Define initial public offerings and some of the costs of going public.
AACSB : Analytical Thinking
Bloom's : Understand
Section : 15.5 IPOs and Underpricing
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
3) Gravity Company needs to raise $47.5 million to fund its expansion plans. The company
will sell shares at a price of $27.90 in a general cash offer and the company's underwriters will
charge a spread of 6 percent. How many shares need to be sold?
3)
A) 2,012,422 shares
B) 1,606,141 shares
C) 1,702,509 shares
D) 1,811,180 shares
E) 1,376,692 shares
Question Details
Difficulty : 1 Basic
Learning Objective : 15-03 Define initial public offerings and some of the costs of going public.
AACSB : Analytical Thinking
Bloom's : Understand
Topic : Costs of issuing securities
Section : 15.7 The Costs of Issuing Securities
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
4) Jenny Corporation needs to raise $53 million to fund a new project. The company will
sell shares at a price of $29.00 in a general cash offer and the company's underwriters will charge
a spread of 7.5 percent. The direct flotation costs associated with the issue are $925,000. How
many shares need to be sold?
4)
, A) 1,763,833 shares
B) 1,700,080 shares
C) 2,010,252 shares
D) 1,827,586 shares
E) 1,918,919 shares
Question Details
Difficulty : 1 Basic
Learning Objective : 15-03 Define initial public offerings and some of the costs of going public.
AACSB : Analytical Thinking
Bloom's : Understand
Topic : Costs of issuing securities
Section : 15.7 The Costs of Issuing Securities
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
5) Disturbed Corporation needs to raise $57 million to fund a new project. The company
will sell shares at a price of $23.70 in a general cash offer and the company's underwriters will
charge a spread of 7.5 percent. The direct flotation costs associated with the issue are $725,000
and the indirect costs are $445,000. How many shares need to be sold?
5)
A) 2,529,251 shares
B) 2,254,735 shares
C) 2,405,063 shares
D) 2,265,725 shares
E) 2,653,438 shares
Question Details
Difficulty : 1 Basic
Learning Objective : 15-03 Define initial public offerings and some of the costs of going public.
AACSB : Analytical Thinking
Bloom's : Understand
Topic : Costs of issuing securities
Section : 15.7 The Costs of Issuing Securities
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
, 6) Under a firm commitment agreement, Zeke Companywent public and received $34.75 for
each of the 8.7 million shares sold. The initial offer price was $37 and the stock rose to $40.88.
The company paid $560,000 in direct flotation costs and $215,000 in indirect costs. What was
the flotation cost as a percentage of funds raised?
6)
A) 6.68%
B) 27.92%
C) 26.47%
D) 17.94%
E) 22.89%
Question Details
Learning Objective : 15-03 Define initial public offerings and some of the costs of going public.
AACSB : Analytical Thinking
Topic : Costs of issuing securities
Section : 15.7 The Costs of Issuing Securities
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 3 Hard
Bloom's : Analyze
7) Northern Air would like to sell 2,100 shares of stock using Dutch auction underwriting.
The bids received are:
Bidder Quantity Price
A 250 $ 28.80
B 350 28.45
C 750 28.30
D 950 27.95
E 1,150 27.75
How much will the company raise in its offer?Ignore all flotation and transaction costs.
7)
1) The Peter Corporation and the Sellers Company have both announced IPOs. You place
anorder for 1,200 shares of each IPO. One of the IPOs is underpriced by $15.25 and the other is
overpriced by $8.00. If you could get all of the shares you ordered for each IPO, what would
your profit be?
1)
A) $18,300.00
B) $27,900.00
C) $7,975.00
D) $7,250.00
E) $8,700.00
Question Details
Difficulty : 1 Basic
Topic : Initial public offerings
Learning Objective : 15-03 Define initial public offerings and some of the costs of going public.
AACSB : Analytical Thinking
Bloom's : Understand
Section : 15.5 IPOs and Underpricing
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
2) The Bert Corporation and Ernie, Incorporated, have both announced IPOs. You place
anorder for 750 shares of each IPO. One of the IPOs is underpriced by $16.00 and the other is
overpriced by $6.75. You will receive all of the shares you ordered of the overpriced IPO, but
only one-half of the shares you ordered of the underpriced IPO. What profit do you expect?
2)
A) $6,937.50
B) $937.50
C) $5,781.25
D) $17,062.50
E) $6,000.00
,Question Details
Difficulty : 1 Basic
Topic : Initial public offerings
Learning Objective : 15-03 Define initial public offerings and some of the costs of going public.
AACSB : Analytical Thinking
Bloom's : Understand
Section : 15.5 IPOs and Underpricing
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
3) Gravity Company needs to raise $47.5 million to fund its expansion plans. The company
will sell shares at a price of $27.90 in a general cash offer and the company's underwriters will
charge a spread of 6 percent. How many shares need to be sold?
3)
A) 2,012,422 shares
B) 1,606,141 shares
C) 1,702,509 shares
D) 1,811,180 shares
E) 1,376,692 shares
Question Details
Difficulty : 1 Basic
Learning Objective : 15-03 Define initial public offerings and some of the costs of going public.
AACSB : Analytical Thinking
Bloom's : Understand
Topic : Costs of issuing securities
Section : 15.7 The Costs of Issuing Securities
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
4) Jenny Corporation needs to raise $53 million to fund a new project. The company will
sell shares at a price of $29.00 in a general cash offer and the company's underwriters will charge
a spread of 7.5 percent. The direct flotation costs associated with the issue are $925,000. How
many shares need to be sold?
4)
, A) 1,763,833 shares
B) 1,700,080 shares
C) 2,010,252 shares
D) 1,827,586 shares
E) 1,918,919 shares
Question Details
Difficulty : 1 Basic
Learning Objective : 15-03 Define initial public offerings and some of the costs of going public.
AACSB : Analytical Thinking
Bloom's : Understand
Topic : Costs of issuing securities
Section : 15.7 The Costs of Issuing Securities
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
5) Disturbed Corporation needs to raise $57 million to fund a new project. The company
will sell shares at a price of $23.70 in a general cash offer and the company's underwriters will
charge a spread of 7.5 percent. The direct flotation costs associated with the issue are $725,000
and the indirect costs are $445,000. How many shares need to be sold?
5)
A) 2,529,251 shares
B) 2,254,735 shares
C) 2,405,063 shares
D) 2,265,725 shares
E) 2,653,438 shares
Question Details
Difficulty : 1 Basic
Learning Objective : 15-03 Define initial public offerings and some of the costs of going public.
AACSB : Analytical Thinking
Bloom's : Understand
Topic : Costs of issuing securities
Section : 15.7 The Costs of Issuing Securities
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
, 6) Under a firm commitment agreement, Zeke Companywent public and received $34.75 for
each of the 8.7 million shares sold. The initial offer price was $37 and the stock rose to $40.88.
The company paid $560,000 in direct flotation costs and $215,000 in indirect costs. What was
the flotation cost as a percentage of funds raised?
6)
A) 6.68%
B) 27.92%
C) 26.47%
D) 17.94%
E) 22.89%
Question Details
Learning Objective : 15-03 Define initial public offerings and some of the costs of going public.
AACSB : Analytical Thinking
Topic : Costs of issuing securities
Section : 15.7 The Costs of Issuing Securities
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 3 Hard
Bloom's : Analyze
7) Northern Air would like to sell 2,100 shares of stock using Dutch auction underwriting.
The bids received are:
Bidder Quantity Price
A 250 $ 28.80
B 350 28.45
C 750 28.30
D 950 27.95
E 1,150 27.75
How much will the company raise in its offer?Ignore all flotation and transaction costs.
7)
