Reference no: EM132050242

1. Which of the following statements is correct?

Oral offers can be made for new securities during the waiting period.

When issuing new securities the first step is the distrubition of the prospectus

The underwirters must approve any increase in the authorized number of shares in a firm

Corporate directors have the authority to authorize additional shard of stock for new issue

A green shoe letter must be provided to all investors who purchase shares of a new equity offering

2. In the beginning of 2017, a bonds yield to maturity is 7.40%. It includes a 1.90% inflation risk premium. In 2017, actual inflation in the economy was 2.10%. What is the bond's real rate of return in 2017? Ignore other risk factors. You expect to hold the bond until maturity.

7.40%

5.30%

7.60%

5.50%

3. A company's most recent annual Free Cash Flow is $180,000,000. Free cash flow is expected to grow by 15% per year for the next 10 years and then grow by 3% per year thereafter. Investors required rate of return is 11%. What is the current value of the stock?

$11,300,755,080 $2,250,000,000 $5,404,011,121 - Course Hero $1,636,363,636