1. Middlesex Fasteners Inc. has paid a dividend every year for the past five years. The first dividend paid was $1.6850 per share and last year the dividend was $2.12 per share. Shares are currently trading at $21.75 per share. If you purchased a share at the current price, what rate of return could you expect to earn?
A. 9.75%
B. 10.21%
C. 14.45%
D. 14.91%
E. 45.90%
2. Which of the following statements is correct?
A. In a best-efforts IPO, the underwriter guarantees that all stock will be sold.
B. The main advantages for a firm in going public are greater liquidity, better access to capital, and greater ability of investors to monitor the management of the firm.
C. A cash offer differs from a rights offer in that in the latter shares are offered to both existing shareholders and investors at large.
D. The announcement of an SEO usually raises a stock's price.
E. The firm commitment process is the most common practice for IPOs.