First or Second Lower or higher Chapman Co., its shareholders, Chapman Co. and its...
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Accounting
First or Second
Lower or higher
Chapman Co., its shareholders, Chapman Co. and its shareholders, none of them
Chapman Co. is a privately owned MNC in the U.S. that plans to engage in an initial public offering (IPO) of stock, so that it can finance its international expansion. At the present time, world stock market conditions are very weak but are expected to improve. The U.S. market tends to be weak in periods when the other stock markets around the world are weak. A financial manager of Chapman Co. recommends that it wait until the world stock markets recover before it issues stock. Another manager believes that Chapman Co. could issue its stock now even if the price would be low, since its stock price should rise later once world stock markets recover. Who is correct? Explain. The manager is correct. If Chapman Co. issues stock now when the price is low, it would receive a dollar amount of proceeds to use for its expansion. If its stock price rises later and the shares have already been sold, would benefit
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