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    How Corporations Issue Securities : Construct Examples where existing shareholders are made worse off when a company makes a cash offer of new stock below the market price AND when a ....

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    Construct a simple example to show the following:

    a. Existing shareholders are made worse off when a company makes a cash offer of new stock below the market price.

    b. Existing shareholders are not made worse off when a company makes a rights issue of new stock below the market price even if the new stockholders do not wish to take up their rights.

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    https://brainmass.com/business/business-math/situations-shareholders-worse-stock-issues-64730

    Solution Preview

    a. For example, Pandora Inc makes a cash offer of 2.5
    million new stocks at $5 a share. Before the issue
    there were 10 million shares outstanding and teh share
    price was $6.

    Then after the issue,

    the total value of the ...

    Solution Summary

    Two examples of situations where shareholders are made worse off by stock issues are examined. The solution is detailed and well presented.

    $2.19

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