High Mountain Mining Wants to Expand Its Current Operations and Requires

question 57

Multiple Choice

High Mountain Mining wants to expand its current operations and requires $3.5 million in additional funding to do so.After discussing this with key shareholders,the firm has decided to raise the necessary funds through a rights offering at a subscription price of $18 a share.The current market price of the firm's stock is $22 a share.How many shares of stock will the firm need to sell through the rights offering to fund the expansion plans?

• A)140,015 shares
• B)159,091 shares
• C)166,667 shares
• D)194,444 shares
• E)205,688 shares

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Definitions:

Medium of Exchange

A facilitating device or arrangement employed to assist in the transactions of buying, selling, or trading items between entities.

Legal Tender

Currency that must be accepted if offered in payment of a debt, by law.

Federal Deposit Insurance

A government guarantee that protects bank depositors' funds up to a certain limit in case of a bank failure.

Bank Panics

Events in which a large number of bank customers withdraw their deposits simultaneously due to fears that the bank will become insolvent.