A company makes an initial public offering of shares to raise $250 million, at an offer price
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Question:
A company makes an initial public offering of shares to raise $250 million, at an offer price of $3.90 per share. The issue is underwritten at $3.50. The costs of preparing the prospectus, legal fees, ASIC registration and other administrative costs add up to $600,000. The firm's share price closes at $4.10 on its first day of trade.
Calculate the IPO underwriting spread. ____
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