a) What are the main differences between corporate debt and equity?
Refer to Topics 1 & 10
b) Explain what is meant by a 10 percent $100 par non-cumulative, convertible,
redeemable, non-participating preference share.
Refer to Topic 10
c) The Melbourne Cup Company Ltd currently has 30 million shares outstanding.
The shares sell for $3.75 per share. To raise $36 million for a new trophy
machine, the firm is considering a rights issue at $2.40 per share.
i) What is the value of a right in this case? 90c
ii) What is the ex-rights price? $3.30