1. Are existing capital structures necessarily optimal?
2. How can managers reduce the likelihood that they will run out of cash?
3. How does a coercive bond exchange offer work?
4. How could a coercive seasoned equity rights offering work?
5. Assume that there is a rights offering for a firm that is worth $500 million and that offers its shareholders the right to buy 1 extra share for each share they already own. The "discount" price for the new shares is 1/5 the price of the current shares. Assume that half the investors do not participate.
What is the loss to nonparticipating investors (shares) and the gain to participating investors (shares)?