Question

The following table reflects results of a Dutch auction: Bidder Quantity Price A 100 20 B...

The following table reflects results of a Dutch auction:

Bidder

Quantity

Price

A

100

20

B

150

18

C

150

16

D

200

14

E

250

12

F

250

10

When the company decides to issue 300 the amount that they could raise would be:

  1. 4.800
  2. 5.100
  3. 5.500

Homework Answers

Answer #1

In case of Dutch auction ,price of share is the lowest price at which the company will be able to issue all the shares which they have decided to issue .And all the shares are then issued at that lowest price ,it does not matter whether any bidder has offered to buy at higher price .

In the given case,company will be able to issue 300 shares at $16

Hence ,amount that they could raise = price per share * Number of shares

=16*300

=4800

Hence,correct option is (A)

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