CHAPTER 2: THE DOMESTIC AND GLOBAL FINANCIAL MARKETPLACE

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Short Answer
	1.	Maple Books decides to raise additional funds by issuing a rights offering to existing shareholders (25.5 million shares outstanding). The exercise price is eight rights plus $5 for one new share. Assuming the offering is fully subscribed, no additional allotments are available, and total issuance costs are 11% of the gross total, what is the amount of additional funds that the company has raised? After the new shares have been issued, how many shares are now outstanding?
	2.	What is an American put option? How does it differ from a European put option?
	3.	Canadian Imperial Bank of Currency (CIBC) received additional net deposits of $26.5 million today. The Bank of Canada has made a reserve requirement of 15%. Assuming that CIBC is currently sitting at the 15% requirement level prior to the deposits, what is the maximum amount of additional loans that the bank can make in order to maintain the reserve requirement level?