Yebuzz Ltd Has Just Raised $100 Million by an Issue

question 17

Multiple Choice

Yebuzz Ltd has just raised $100 million by an issue of 10 million converting preference shares.Each CPS converts into five ordinary shares.If the ordinary share price immediately prior to conversion is $2 per share,calculate the rate of the conversion discount.

• A)0.5%
• B)0.9%
• C)0%
• D)5%

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Definitions:

Financial Reporting

The process of disclosing financial information and statements to the external users to help them make informed decisions about investing in or lending to the company.

Capital Lease

A capital lease is a lease agreement that is structured so that the lessee effectively becomes the owner of the asset for accounting purposes, usually for long-term assets.

Lease Liability

An obligation representing the present value of future lease payments a lessee is committed to make under a lease agreement.