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ABC Logistics The Managers of ABC Logistics (ABC) Have Decided to Expand

question 10

Multiple Choice

ABC Logistics
The managers of ABC Logistics (ABC) have decided to expand the company’s operations into a few new markets. To fund this opportunity, ABC has decided to launch a seasoned equity offering to raise new equity capital. ABC currently has 12 million shares outstanding, and yesterday’s closing market price was $40.00 per ABC share. The company plans to sell 3 million newly issued shares in its seasoned offering. The investment banking firm of Armstrong Incorporated has agreed to underwrite the new stock issue for a 4 percent discount from the offering price, which ABC and Armstrong have agreed should be $0.50 per share lower than ABC’s closing price the day before the offering is sold.

-If ABC's stock price closes at $39.00 the day before the offering,calculate the return earned by ABC's existing stockholders on their shares from the time before the seasoned offering was announced through the time it was actually sold for $38.50 per share.

Definitions:

Proletariat

The class of wage-earners in a capitalist society whose only significant material value is their labour-power.

Communist Manifesto

A political document written by Karl Marx and Friedrich Engels that outlines the principles of communism and calls for the proletariat's uprising.

Instrumental Action

Behavior oriented towards achieving a specific goal or end, often motivated by self-interest or efficiency.

Objective Goal

A specific, measurable, and observable aim that is pursued by individuals or groups, often set to achieve desired outcomes.