This question is in two parts because the question I need help with references a

Question

This question is in two parts because the question I need help with references a question that we didn't have to complete. Reference question:

Ms. Kraft owns 50K shares of the common stock of Copperhead Corporation with a market $2 per share, or $100K overall. The company is currently financed as follows:

Common stock (8M shares) valued at 2M
Short term loans 2M

Copperhead now announces that it is replacing 1M of short term debt with an issue of common stock. What action can Ms. Kraft take to ensure that she is entitled to exactly the same proportion of profits as before?

The question we are assigned is:

"Look back to Section 13

Explanation / Answer

Total share loading: Shareholding = 1500,000 / 8,000,000 = 19% In order to get the same share of profit even after the issue of common stock is that she should maintain the same percentage of shareholding as she was holding before the issue : Shareholding % of Ms Kraft before issue = 50,000 / 8,000,000 = 0.625% So Ms kraft should buy the new issue such that she maintains the same %age of share holding= 0.625%

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