ML Underwriters Paid an Issuer $37,694,528 as IPO Proceeds

question 88

Multiple Choice

ML Underwriters paid an issuer $37,694,528 as IPO proceeds. The IPO offered 1.86 million shares of which 1.835 million were sold at an offer price of $21.85 a share. The underwriting spread was 7.25%. What type of underwriting was this?

• A)best efforts
• B)variable
• C)firm commitment
• D)plain vanilla
• E)stand-by

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Definitions:

Coupon Payments

Periodic interest payments made to bondholders, usually on a semi-annual basis, based on the interest rate specified by the bond's terms.

Yield to Maturity

The expected total yield on a bond when it is kept until the date it matures.

Convertible Bond

A kind of debt security that allows for conversion into a fixed number of shares of the company issuing it, usually at the choice of the person holding the bond.

Common Stock

A type of security that signifies ownership in a corporation and represents a claim on part of the company's profits or losses.