Which of the following best defines underwriting?
Multiple Choice
When shares are traded between investors at a price below its market value.
When shares are sold to the public for the first time.
When an investment dealer or a group of investment dealers purchase the securities from a firm and market them to the public.
The process of preparing shares to be traded on the OTC market.
Situation where an investment dealer or group of investment dealers sell securities at a price below or under its market value.
In: Finance
Leaf Industries is preparing its master budget for 2013. Relevant data pertaining to its sales budget are as follows:
Sales for the year are expected to total 8,000,000 units. Quarterly sales are 25%, 30%, 15%, and 30%, respectively. The sales price is expected to be $2.00 per unit for the first quarter and then be increased to $2.20 per unit in the second quarter.
|
1st Quarter |
2nd Quarter |
3rd Quarter |
4th Quarter |
Total for Yr |
|
|
Unit Sales |
8,000,000 |
||||
|
Unit Selling Price |
|||||
|
Total Sales |
In: Accounting
In: Economics
Diane Wallace bought a living-room suite on credit, signing an installment contract with a finance company that requires monthly payments of $49.06 for three years. The first payment is made on the date of signing and interest is 20% compounded monthly. (a) What was the cash price? (b) How much will Diane pay in total? (c) How much of what she pays will be interest? (d) Based on the cash price calculated in part (a), if the interest rate is changed to 17.7% compounded monthly, what is the new monthly payment?
In: Accounting
Consider a permanent adverse productivity shock (for example, a permanent increase in the price of oil) which lowers the current and future productivity of capital and the current and expected future real incomes of households. Assuming a closed economy, first analyze the general equilibrium effects of this shock on output, employment, the real wage, the price level, and the real interest rate in both the classical and the Keynesian versions of macroeconomic adjustment. Second, explain how the adjustment effects would differ in the case of a temporary adverse productive shock.
In: Economics
ABC Ltd., a technology company, issues a $47.2 million IPO providing proceeds to ABC of $5.31 per share, from an offer price to the public of $5.9 per share. The company's legal fees, ASIC registration fees, and other administrative costs are $164,000. The company's share price increases 5.6 per cent on the first day. What is the total amount of the underwriter’s spread (in millions of dollars to the nearest three decimal places; don’t use the $ sign eg 7.897)?
In: Finance
You are a financial executive at Dunder Mifflin. Your boss, David Wallace, wants you to estimate the price of the company’s stock. Currently, the company does not pay dividends. However, in 3 years the company expects to pay its first dividend of $0.50, After that, dividends will grow at 80% per year for 2 years. Then, dividends will grow at a constant rate of 7% per year indefinitely
If the company’s cost of equity is 16% and the market is in equilibrium, what is the price of the stock today?
In: Finance
On September 1, 19X1, Golf Company sold and issued to Youngblood Company $60,000, 5-year, 9% coupon annual interest rate (payable semiannually) bonds for a price that would yield the market annual rate of interest of 8%. The bonds were dated July 1, 19X1, and interest is payable each June 30 and December 31. The accounting period for Golf ends on December 31.
Record the cash price at September 1, and the journal entries for issuance and the first 2 interest periods.
In: Accounting
Nelson Company bought inventory for $42,000 on terms of 2/15, n/60. It pays for the first $31,500 of inventory purchased within the discount period and pays for the remaining $10,500 two months later.
| 1. | Prepare the journal entries to record the purchase and the payment under both the (a) gross price and (b) net price methods. Assume that Nelson uses the periodic inventory system. |
| 2. | Next Level Which of the two methods yields a conceptually preferable valuation of inventory? |
In: Accounting
The Birdstrom Co. just recently paid a dividend of $2.00 per share. Stock market analysts expect that the growth rate for the dividend will be 40% in year 1, 30% in year 2, 20% in year 3, 15% in year 4, and 10% in year five. After the fifth year, the dividend will grow at a constant rate of 6%. If the required return for Birdstrom is 12%, calculate the current stock price and the expected dividend yield and capital gain in the first year if you buy the stock at the computed price
In: Finance