Issacson Inc. has 2,500,000 shares that are currently selling at $30.50 per shares. They are considering making a stock-for-
stock offer to acquire The Kissinger Co. Kissinger has 450,000 shares outstanding that are selling for $42.25. If the stock-for-
stock transaction takes place at the ratio between the current share prices, what portion of the post-acquisition firm will the
old shareholders of The Kissinger Co. hold after the transaction?
11.50%
18.00%
23.22%
15.25%
19.96%
Question 21
10 pts
You are considering purchasing a new issue of convertible bonds by The Technoverve Co. These securities have a face value of
$1,000, pay 1.10% (annual) coupons, mature in three years, and have a conversion ratio of 24.0385. You have analyzed several
straight-bonds issued by firms in the industry, and you feel that it is reasonable to assume that the straight-bond component of
these bond is $850. Technoverve's stock is currently trading for $28.62, you estimate that the Sigma of the shares is 0.35, and
the current yield on three-year T-Bonds is 4.25%. Based on these values and your assumptions, what is a reasonable value for
the instruments?
$1,098.81
$1,280.58
$1,296.96
$995.12
$955.30
