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About the shareholders financial obligation

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1. A firm has 1,000 shares of common stock outstanding with a par value of $15 per share. Upon liquidation, the firm has insufficient funds and requires an additional $5,000 to repay its creditors. Which of the following statements is true about the shareholders' financial obligation?

a. If the share is purchased for $10, then the stockholders are obligated to contribute $5 per share to the firm.

b. If the share is purchased for $12, then the stockholders are obligated pay a dividend of $3 per share to the firm.

c. If the share is purchased for $15, then the stockholders are obligated to pay $15 per share to the bondholders.

d. If the share is purchased for $20, then the stockholders are obligated pay an interest of $15 per share to the firm.

e. If the share is purchased for $8, then the stockholders are obligated pay $2 per share to the creditors.

2. A call option on the EUR, with time to maturity of 3 months and strike price of 1.1 USD/EUR, is currently trading at a premium of 0.07 USD. If you buy call options on 80,000 EUR, and then at maturity the Euro is trading at 1.25 USD/EUR, what is your net profit from this position?

 

Reference no: EM131989848

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