Phil and Terry Started a New Business Three Years Ago

question 4

Multiple Choice

Phil and Terry started a new business three years ago. Two years ago, they incorporated the business and issued themselves each 20,000 shares of stock. Last year, they took the company public in an initial public offering (IPO) and issued an additional 100,000 shares of stock at that time. The offer price was $14 a share, the spread was 8 percent, and the lockup period was six months. The stock closed at $17 a share at the end of the first day of trading. During the first six months of trading, the stock had a price range of $13 to $23 per share. During the second six months of trading, the stock sold between $15 and $21 per share. Both Tracie and Amy purchased 100 shares at the offer price. Given this, which one of the following statements is correct? Ignore trading costs and taxes.

• A) Tracie could have earned a maximum profit of 100($23 - 17) on her investment.
• B) Phil could have sold 5,000 shares at $23 per share.
• C) The underwriters earned a spread equal to 8 percent of $17.
• D) The maximum price at which Terry could have sold shares is $21.
• E) Amy paid 108 percent of $14 per share to purchase her 100 shares.

Recognize the importance of assessing managers' strengths and developmental needs.

Comprehend the role of challenges in leadership development.

Analyze the impact of job rotation on managerial skill development.

Recognize the design and effectiveness of leadership training programs.

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Definitions:

Parallel Payments

Transactions where payment is made through duplicating payment streams, allowing for simultaneous settlements in different currencies or systems.

Credit Scoring

A statistical analysis performed by lenders and financial institutions to assess a person's creditworthiness and determine the likelihood of loan repayment.

Consumer Credit

Loans extended to individuals for personal, family, or household purchases or expenses.

Payables Risk Analysis

The assessment of the risks associated with failing to meet the company’s obligations on time, affecting its creditworthiness.