63) Which of the following is not an advantage of going public? Going public generally brings a lower price in the public market than in the venture capital or private placement markets. C. Going public enables a firm to raise additional capital. D. Going public gives existing shareholders a chance to sell portions of their shares as part of the IPO giving them a cash return on their investment and allows them to diversify their investment portfolios.
64) You work for ABC, Inc. in the finance department. You own shares in ABC, Inc. that are selling at $20 per share on the NYSE. You just found out they will have a new stock offering. You just found out they will publicly announce a new stock offering. The costs from the offering will be 10% of the new offering. The new offering will increase the number of outstanding share by 30%. There are currently 20,000,000 shares of ABC outstanding. Once the announcement is made public, what might be the expected impact from transaction (or issuance) costs on each share you own? Continue reading A. Going public achieves liquidity and diversification for current shareholders B