Kern Corporation entered into an agreement with its investment banker to sell 10 million shares of the
Question:
Kern Corporation entered into an agreement with its investment banker to sell 10 million shares of the company's stock with Kern netting $210 million dollars from the offering. The expected price to the public was $25 per share. The out-of-pocket expenses incurred by the investment banker were $2,000,000.
a. What profit or loss would the investment banker incur if the issue sold to the public at an average price of $25 per share?
b. What profit or loss would the investment banker incur if the issue were sold to the public at an average price of $20 per share?
c. Is the agreement between the company and its investment banker an example of a negotiated or a best-efforts deal? Why? Which is riskier to the company? Why?
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Step by Step Answer:
Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts