Determine the corporations earnings per share

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1. Five investment alternatives have the following returns and standard deviations of returns.

Alternatives Returns:Expected Value Standard Deviation
A... 1,200 300
B... 800 600
C.. 5,000 450
D.. 1,000 430
E.. 60,000 13,200

Using the coefficient of variation, rank the five alternatives from lowest risk to highest risk.

2. Kevin's Bacon Company Inc. has earnings of $6 million with 2,000,000 shares outstanding before a public distribution. Five hundred thousand shares will be included in the sale, of which 300,000 are new corporate shares, and 200,000 are shares currently owned by Ann Fry, the founder and CEO. The 200,000 shares that Ann is selling are referred to as a secondary offering and all proceeds will go to her.
The net price for the offering will be $15.50 and the corporate proceeds are expected to produce $1.5 million in corporate earnings.

(a) What were the corporation's earnings per share before the offering?

(b) What are the corporation's earnings per share expected to be after the offering?

3. Trump Card Co. will issue stock at a retail (public) price of $30. The company will receive $27.60 per share.
(a) What is the spread on the issue in percentage terms?

(b) If the firm demands receiving a new price only $1.50 below the public price suggested in part (a), what will the spread be in percentage terms?

(c) To hold the spread down to 3 percent based on the public price in part (a), what net amount should Trump Card Co. receive?

Reference no: EM1353872

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