Highlander Homes Stock Trades at $30 Per Share and There

question 55

Multiple Choice

Highlander Homes stock trades at $30 per share and there are 50 million shares outstanding. The management would like to issue a total of 10 million (primary and secondary) shares in an SEO. If the underwriter charges 5% of gross proceeds, 25% of the shares are primary shares sold to new investors, and 75% of the shares are secondary shares sold to new investors, what percentage of the company will be owned by the new investors?

• A) 13.33%
• B) 18.10%
• C) 14.29%
• D) 19.05%

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Definitions:

MAN

Metropolitan Area Network, a large computer network that spans a city or a large campus.

LAN

Local Area Network, a computer network that interconnects computers within a limited area such as a residence, school, or office building.

Bits Per Second

A measure of data transmission speeds in digital networks, quantifying how many bits are transmitted each second.

Bandwidth

The transmission capacity of a network, stated in bits per second.