Hollon Securities Is Underwriting an Issue of Llamas Unlimited, Inc

question 38

Multiple Choice

Hollon Securities is underwriting an issue of Llamas Unlimited, Inc. common stock. Hollon will pay LU $45.00 a share and offer the stock to the public at $48.00. The direct cost of underwriting the issue is $1.00 per share. The underwriting spread is

• A) $4.00 per share.
• B) $3.00 per share.
• C) $2.00 per share.
• D) not ascertainable from the information above.