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1. i. ACI company needs to raise Tk. 30 million to fund a new project.

ACI will issue new


shares to raise the needed capital. If the offer price is Tk. 65 per share and the firm’s
underwriters charge a spread of 6%, how many shares need to be sold?
II. In addition, if SEO filing fee and other legal/ administrative fee of the offering is Tk. 2.5
million, how many shares in total need to be sold?

2. ABC textile has 10,000 shares outstanding at Tk. 50 each. They expect to raise Tk.
200,000 by a rights offerings with a subscription price of Tk. 40. How many rights must
you turn in to get a new share?

3. ABC textile has 10,000 shares outstanding at Tk. 50 each. Last week, the firm issued
rights to raise new equity. To purchase a new share, an existing shareholder must remit
Tk. 40 and 2 rights. What is the ex-right price? What is the value of one right?

4. BAA company plans to issue Tk. 1 million of bonds with coupon rate of 10% and 10 year
to maturity. The current market interest rate is 10%. After 1 year, the interest rate on the
bond could be either 15% or 5% with equal probability. Assume investors are risk
neutral.

I. If the bond is a noncallable bond, what is the price of this bond?


II. If the bond is a callable bond with call price Tk. 1,100, what is the price of this
bond?