Question

1. True or False When firm A firstly issued 1 million shares through IPO, firm A...

1. True or False

When firm A firstly issued 1 million shares through IPO, firm A raised $10/share so it totally raised $10 million equity fund. Now the market price for firm A's stock is $50/share, so today firm A raises a total of $50 millions from shareholders. Explain.

2. Search online, list the 30 firms in DJIA with the industry each firm is in.

3. What is the trading hours of NYSE?

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Answer #1

1. False, the company raised only $10 million from its shareholders.There is no further inflow of cash to the company after the IPO proceeds.

The increase of share price to $50 per share represents the increase in the wealth of the share holders or capital appreciation of the shares.There is no cashflow to the company because of this.$50million is the market capitalisation of the company.

It shows the company's value.This can be used in case of acquisition etc.

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