The information applies to the following two questions: An investment bank agrees to underwrite an issue of
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Question:
The information applies to the following two questions:
An investment bank agrees to underwrite an issue of 15 million shares of stock for Looney Landscaping Corporation. Suppose that the investment bank agrees to underwrite on a best efforts basis. The investment bank is able to sell 13.5 million shares for $10.00 per share, and it charges Looney Landscaping Corporation $0.325 per share sold. What is the profit to the investment bank?
$4,387,500 | ||
$22,500,000 | ||
$4,362,500 | ||
$4,853,400 |
If the investment bank can sell the shares for only $8.50, what is the profit to the investment bank?
$4,387,500 | ||
$22,500,000 | ||
$4,670,000 | ||
$4,865,000 |
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