Before a seasoned stock offering, you owned 7,500 shares of a firm that had 500,000 shares outstanding

The value of a right depends upon: I. the number of rights required to purchase one new share. II. the market price of the security. III. the subscription price. IV. the price-earnings ratio of the stock.    A.  II and III only B.  II and IV only C.  I and II only D.  I, II, and III only E.  I, II, III, and IV Refer to section 15.8

49.

Before a seasoned stock offering, you owned 7,500 shares of a firm that had 500,000 shares outstanding. After the seasoned offering, you still owned 7,500 shares but the number of shares outstanding rose to 625,000. Which one of the following terms best describes this situation?    A.  overallotment B.  percentage ownership dilution C.  Green Shoe D.  Red herring E.  abnormal event Refer to section 15.9

50.

Which one of the following statements concerning dilution is correct?    A.  Dilution of percentage ownership occurs whenever an investor participates in a rights offer. B.  Market value dilution increases as the net present value of a project increases. C.  Market value dilution occurs when the net present value of a project is negative. D.  Neither book value dilution nor market value dilution has any direct bearing on individual shareholders. E.  Book value dilution is the cause of market value dilution. Refer to section 15.9

51.

Which one of the following statements is correct concerning the issuance of long-term debt?    A.  A direct long-term loan has to be registered with the SEC. B.  Direct placement debt tends to have more restrictive covenants than publicly issued debt. C.  Distribution costs are lower for public debt than for private debt. D.  It is easier to renegotiate public debt than private debt. E.  Wealthy individuals tend to dominate the private debt market. Refer to section 15.10