The Huff Co

question 84

Multiple Choice

The Huff Co.has just gone public.Under a firm commitment agreement,Huff received $21.50 for each of the 6 million shares sold.The initial offering price was $23.65 per share,and the stock rose to $31.42 per share in the first few minutes of trading.Huff paid $1,260,000 in direct legal and other costs,and $390,000 in indirect costs.The flotation costs were what percentage of the funds raised?

• A)38.56 percent
• B)40.32 percent
• C)41.68 percent
• D)48.03 percent
• E)49.09 percent

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Definitions:

Voidable

Capable of being made void; not utterly null, but annullable, and hence that may be either voided or confirmed. See also void.

Capacity To Contract

The legal ability of a party to enter into a contract, typically requiring that the person is of legal age and sound mind.

Oral Contract

A verbal agreement between parties that is legally binding, though harder to prove than written contracts.

Professional Consultation

The process of seeking expert advice in a specific field or industry from a qualified individual or organization.