Eastern Electric is offering 2,100 shares of stock in a Dutch auction. The bids include: 1,400 shares at $32 a share, 1,500 shares at $31, 1,400 shares at $30, and 900 shares at $29 a share. How much cash will Eastern Electric receive from selling these shares? Ignore all transaction and flotation costs.

Question

Quizplus · Accepted Answer

To find out how much cash Eastern Electric will receive, we need to identify the highest price at which all shares can be sold. In this case, that price is $30 per share because only 2,100 shares are available, and at $30, all bids can be satisfied. Eastern Electric will therefore sell all 2,100 shares at $30 per share, receiving a total of $63,000 ($30 per share x 2,100 shares). The correct answer is D, $63,000.

Eastern Electric Is Offering 2,100 Shares of Stock in a Dutch