BUS 350 PS 4

 
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1. Dutch Auction---Facelook sold its IPO shares (300 shares in total) through a Dutch auction. Suppose the following table is the detailed bidding record. Calculate how much capital Facelook has raised.

Investor: Bid Price; Shares
A: $60; 80 shares
B: 70; 200
C: 80; 100
D: 90; 170
E: 100; 50
2. Investment Banking---Which of the following statements is the LEAST likely to be correct?
3. Underwriting Process---Which of the following statements is the LEAST likely to be correct?
4. Mutual Funds---Which of the following statements is the LEAST likely to be correct?
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5. Primary vs. Secondary Markets---Consider two transactions. The Norwegian government sells bonds in the United States. The buyer of one of those bonds is an insurance company, which, after holding the bond for a year, sells it to a mutual fund. Which of these transactions occurs in the primary market and which in the secondary market? Does the Norwegian government get any proceeds from the sale between the insurance company and the mutual fund?
6. Mutual Funds---Which of the following statements is the LEAST likely to be correct?
7. Exchange Traded Funds---Suppose DJIA is a simple weighted average of the stock prices of the 30 component stocks. The ETF that tracks DJIA's performance has the symbol DIA. Assume that one unit (share) of DIA entitles the owner one share each of the 30 DJIA component stocks. If there is a price discrepancy between DJIA and DIA, authorized participants (APs) are allow to arbitrage away the price difference. Describe the interactions between APs and DIA's sponsor when DJIA is below DIA. Also explain why eventually DIA will be in line with DJIA again.
8. Exchange Traded Funds---
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9. Your Name
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