You work for ABC, Inc. in the finance department. Youown shares in ABC, Inc. tha

Question

You work for ABC, Inc. in the finance department. Youown shares in ABC, Inc. that are selling at $20 per share on theNYSE. You just found out they will have a new stock offering. Youjust found out they will publicly announce a new stock offering.The costs from the offering will be 10% of the new offering. Thenew offering will increase the number of outstanding share by 30%.There are currently 20,000,000 shares of ABC outstanding. Once theannouncement is made public, what might be the expected impact fromtransaction (or issuance) costs on each share youown? A. There will be no costs because there is no informationasymmetry present. B. You will lose 3% of the value of the share you own. C. There will be no costs because markets are perfect when itcomes to new stock offerings. D. You will lose 2% of the value of the shares you own.
You work for ABC, Inc. in the finance department. Youown shares in ABC, Inc. that are selling at $20 per share on theNYSE. You just found out they will have a new stock offering. Youjust found out they will publicly announce a new stock offering.The costs from the offering will be 10% of the new offering. Thenew offering will increase the number of outstanding share by 30%.There are currently 20,000,000 shares of ABC outstanding. Once theannouncement is made public, what might be the expected impact fromtransaction (or issuance) costs on each share youown? A. There will be no costs because there is no informationasymmetry present. B. You will lose 3% of the value of the share you own. C. There will be no costs because markets are perfect when itcomes to new stock offerings. D. You will lose 2% of the value of the shares you own. You work for ABC, Inc. in the finance department. Youown shares in ABC, Inc. that are selling at $20 per share on theNYSE. You just found out they will have a new stock offering. Youjust found out they will publicly announce a new stock offering.The costs from the offering will be 10% of the new offering. Thenew offering will increase the number of outstanding share by 30%.There are currently 20,000,000 shares of ABC outstanding. Once theannouncement is made public, what might be the expected impact fromtransaction (or issuance) costs on each share youown? A. There will be no costs because there is no informationasymmetry present. B. You will lose 3% of the value of the share you own. C. There will be no costs because markets are perfect when itcomes to new stock offerings. D. You will lose 2% of the value of the shares you own.
You work for ABC, Inc. in the finance department. Youown shares in ABC, Inc. that are selling at $20 per share on theNYSE. You just found out they will have a new stock offering. Youjust found out they will publicly announce a new stock offering.The costs from the offering will be 10% of the new offering. Thenew offering will increase the number of outstanding share by 30%.There are currently 20,000,000 shares of ABC outstanding. Once theannouncement is made public, what might be the expected impact fromtransaction (or issuance) costs on each share youown? A. There will be no costs because there is no informationasymmetry present. B. You will lose 3% of the value of the share you own. C. There will be no costs because markets are perfect when itcomes to new stock offerings. D. You will lose 2% of the value of the shares you own.

Explanation / Answer

B is the answer

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.