Assume the Issuer Incurs $1 Million in Other Expenses to Sell

question 89

Multiple Choice

Assume the issuer incurs $1 million in other expenses to sell 3 million shares at $40 each to an underwriter and the underwriter sells the shares at $43 each.By the end of the first day's trading, the issuing company's stock price had risen to $70.In %age terms, how much market value is absorbed by the total cost (direct expenses plus underpricing cost) ?

• A)13.33%
• B)23.33%
• C)33.33%
• D)43.33%

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Definitions:

Highly Superior Autobiographical Memory

An extraordinary ability to recall one's personal past events in great detail.

Amnesia

Partial or total loss of memory.

Implicit Memory

A type of memory that is unconsciously and effortlessly retrieved, affecting thoughts and behaviors, including skills and conditioned responses.

Explicit Memory

Conscious memory: subjects can retrieve an item and indicate that they know the retrieved item is the correct one.