When Issuing New Stock, a Firm Received $50 Million While

question 77

Multiple Choice

When issuing new stock, a firm received $50 million while the underwriting spread was $4 million and total direct expenses were $6 million.The %age of the proceeds absorbed by direct expenses was:

• A)7.14%.
• B)8.00%.
• C)10.71%.
• D)12.00%.

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Definitions:

Gross Sales

The total revenue generated from the sale of goods or services before any deductions are made for returns, allowances, or discounts.

Wal-Mart

A multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores, known for its large-scale operations and economic impact.

Exxon

An American multinational oil and gas corporation, one of the world's largest publicly traded energy providers.

Dependency Theory

An economic theory suggesting that developing nations are dependent on developed nations and this dependency inhibits their growth and development.