PLEASE LABEL WHEN ANSWERING THE QUESTIONS:

A

B

WHEN ANSWERS PLEASE

PLEASE ANSWER ALL QUESTIONS

PLEASE ANSWER 2 PART QUESTIONS.

A & B.

company is going public at $18 and will use the ticker XYz. The underwiters will charge a 7 percent spread. The company is issuing 17 milion shares, and insiders will continue o hold an additional 34 million shares that will not be part of the IPO. The company will also pay $2.5millij on of audit fees, $3.5 million of legal fees, and $700,000 of printing ees. The stock doses the first day at \$20. Now the company grants a 15 percent overaliotment option to the underwriter. The underwerter issues shares that aro backed by the entire overaliotment option but has not yet exercised the option. a. Explain what will happen it the price of the stock increases to $24,00. Describe the underwriter profis from the overallotment option in your explanation. Enter your answer in millions. For example, an answer of $1.23 milition should be entered as 1.23, not 1,230,000. Do not round intermediate calculations. Round your answer to two decimal places. If the stock price increases to $24.00 in the secondary market, the underwriter. exercise its option and the underwiter profit will be 5 b. Explain what will happen if the price of the stock decreases to $15.00. Describe the underwriter profits from the overallotment cotion in your axplanation. Enter your answer in mullions. For example, an answer of $1.23 milion should be entered as 1.23, not 1,230,000. Do not rounid intermediate calculations. Round your anserer to two decimal places. If the stock price decreases to $15.00 in the secondary market, the underwriter exercise its option and the underwriter proft will be 5 million. company is going public at $18 and will use the ticker XYZ. The underwriters will charge a 7 percent spread. The company is issuing 17 millon shares, and insiders will continue o hold an additional 34 milion shares that will not be part of the 1P0. The company will also pay $2.5million of audit fees, $3.5 million of legal fees, and $700,000 of printing lees. The stock doses the first day at $20. Now the company grants a 15 percent overallotment option to the undervititer. The underwriter issues shares that are cacked ty the ontire overallotment option but has not yet exercised the option. a. Expiain what will happen if the price of the stock increases to $24.00. Describe the underwriter profits from the overallotment option in your explanation. Enter your answer in milions. For example, an answer of $1.23 milion should be entered as 1.23, not 1,230,000. Do not round intermediate calculations. Round your ariswer to two decimal places. It the stock price increases to $24.00 in the secondary market, the underwriter exercise its option and the underwriter profit will be 3 . b. Explain what will happen if the price of the stock decreases to $15.00. Describe the underwriter profits from the overaliotment option in your explanation. Enter your snswer in millions, for example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Do not round intermediate calculations. Rlound your answer ta two decimal places. If the stock price decreases to $15,00 in the secondary market, the underwriter exercise its option and the underwriter proft will be 5 . million. company is going public at $18 and will use the ticker XYZ. The underwriters will charge a 7 percent spread. The company is issuing 17 millon shares, and insiders will continue o hold an additional 34 milion shares that will not be part of the 1P0. The company will also pay $2.5million of audit fees, $3.5 million of legal fees, and $700,000 of printing lees. The stock doses the first day at $20. Now the company grants a 15 percent overallotment option to the undervititer. The underwriter issues shares that are cacked ty the ontire overallotment option but has not yet exercised the option. a. Expiain what will happen if the price of the stock increases to $24.00. Describe the underwriter profits from the overallotment option in your explanation. Enter your answer in milions. For example, an answer of $1.23 milion should be entered as 1.23, not 1,230,000. Do not round intermediate calculations. Round your ariswer to two decimal places. It the stock price increases to $24.00 in the secondary market, the underwriter exercise its option and the underwriter profit will be 3 . b. Explain what will happen if the price of the stock decreases to $15.00. Describe the underwriter profits from the overaliotment option in your explanation. Enter your snswer in millions, for example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Do not round intermediate calculations. Rlound your answer ta two decimal places. If the stock price decreases to $15,00 in the secondary market, the underwriter exercise its option and the underwriter proft will be 5 . million