Question: Using the information provided in problem 7 , assume that the underwriter is granted a 1 5 % overallotment option. The underwriter issues shares backed

Using the information provided in problem 7, assume that the underwriter is granted a 15% overallotment option. The underwriter issues shares backed by the entire overallotment option but has not yet exercised the option.
Based on the information above, please answer the following questions:
a) Explain what will happen if the stock price increases to $30 a share. Describe the underwriter's profits in your answer.
b) Explain what will happen if the stock price falls to $15 a share. Describe the 4underwriter's profits in your answer.
Using the information provided in problem 7, assume that the underwriter

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