In: Finance
Problem 18-01
Security Brokers Inc. specializes in underwriting new issues by small firms. On a recent offering of Beedles Inc., the terms were as follows:
Price to public: $5 per share
Number of shares: 3 million
Proceeds to Beedles: $14,000,000
The out-of-pocket expenses incurred by Security Brokers in the design and distribution of the issue were $280,000. What profit or loss would Security Brokers incur if the issue were sold to the public at the following average price?
$5 per share? Use minus sign to enter loss, if any. _____________$
$6 per share? Use minus sign to enter loss, if any. _____________$
$4.25 per share? Use minus sign to enter loss, if any. _____________$