Winston Sporting Goods is considering a public offering of common shares. Its investment dealer has informed the

Question:

Winston Sporting Goods is considering a public offering of common shares. Its investment dealer has informed the company that the retail price will be $18 per share for 600,000 shares. The company will receive $16.50 per share and will incur $150,000 in registration, accounting, and printing fees.
a. What is the spread on this issue in percentage terms?
b. What are the total expenses of the issue as a percentage of total value (at retail)?
c. If the firm wants to net $18 million from this issue, how many shares must be sold?

Dealer
A dealer in the securities market is an individual or firm who stands ready and willing to buy a security for its own account (at its bid price) or sell from its own account (at its ask price). A dealer seeks to profit from the spread between the...

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