Homework answers / question archive / Stump, Inc

Stump, Inc

Finance

Share With

Stump, Inc. issued 10 million shares of stock in an IPO. The offering price to the public is $20 per share while the underwriter's commission is 7%. The firm's legal fees, SEC registration fees, and other administrative costs were $500,000. The firm's stock price increased by 20 percent on the first day of trading. What is the firm's total cost of issuing the securities? $54.5 million $14 million O $59 million O $40 million
Suppose two firms want to borrow money from a bank for a period of 10 years. Firm A has excellent credit and can borrow at the prime rate, whereas Firm B's credit standing is prime rate plus 2%. The current prime rate is 3.75%, the 30-year Treasury bond yield is 3.54%, the three-month Treasury bill yield is 0.54%, and the 10-year Treasury note yield is 2.24%. What are the appropriate loan rates for both the firms? O 5.45% for Firm A, 7.45% for Firm B O 3.75% for Firm A, 5.75% for Firm B O 6.75% for Firm A, 8.75% for Firm B o 2.24% for Firm A, 4.24% for Firm B