RAJ Inc Would Like to Issue One Million Common Shares and and Has

question 29

Multiple Choice

RAJ Inc. would like to issue one million common shares and has an unpublished reserve price of $4.75. The company's investment dealer received the following response to its tender offer. 200,000 shares could be sold at $5.45, 350,000 at $5.25, 350,000 at $5.05, 600,000 at $4.90, 525,000 at $4.75, 725,000 at $4.50 and 700,000 at $4.25. What is the resulting striking price and the distribution of shares to each shareholder?

• A) $5.45 with the one investor taking all that are available.
• B) $5.05 with each investor allotted 4 for each 5 tendered.
• C) $4.88 with each investor allotted 2 shares for each 5 tendered.
• D) $4.75 with each investor receiving 4 for every 5 tendered.
• E) $4.90 with each investor allotted 2 for each 3 tendered.

Comprehend how the choice of transfer price can affect divisional profit reporting and decision-making.

Recognize the influence of evaluation metrics like ROI and residual income on managerial decisions regarding investment opportunities.

Understand arguments for using gross or net figures in ROI calculations and their implications.

Identify the benefits of different performance measures in encouraging strategic expansion and efficient resource allocation.

---

Definitions:

Focus Group

A form of group research interview in which a moderator guides a group through a series of discussion questions while the rest of the research team members observe.

Moderator

An individual who oversees or regulates discussions or interactions, ensuring they remain productive and respectful.

Questionnaire

A set of written questions used for collecting information from respondents for research or survey purposes.

Primary Research

The process of collecting original data directly from sources through surveys, interviews, or experiments.