1. Which of the following statements is least accurate?
A. Investors prefer to invest in putable common shares rather than callable common shares.
B. The issuing company is obligated to buy callable common shares at a predetermined price.
C. Putable common shares facilitate raising capital because of their appeal to investors over callable common shares.
2. Which of the following is most likely true for a leveraged buyout (LBO)?
A. A company uses debt to buy back its shares.
B. The management of a firm uses its own equity to purchase the common shares of a public company.
C. A group of investors uses a large amount of debt to buy all outstanding common shares of public company.
3. Given the following information -
Number of shares outstanding = 200,000
Price per share = $ 102
Total assets = $ 24,000,000
Total liabilities = $ 10,500,000
Net Income = $ 6,000,000
The book value of the company is closest to:
A. $ 13,500,000.
B. $ 19,500,000.
C. $ 20,400,000.