Are existing capital structures necessarily optimal -nbsp


1. Are existing capital structures necessarily optimal?

2. How can managers reduce the likelihood that they will run out of cash?

3. How does a coercive bond exchange offer work?

4. How could a coercive seasoned equity rights offering work?

5. Assume that there is a rights offering for a firm that is worth $500 million and that offers its shareholders the right to buy 1 extra share for each share they already own. The "discount" price for the new shares is 1/5 the price of the current shares. Assume that half the investors do not participate.

What is the loss to nonparticipating investors (shares) and the gain to participating investors (shares)?

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Corporate Finance: Are existing capital structures necessarily optimal -nbsp
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