The Ajax Corporation Has Received a Firm Commitment from Its

question 79

Essay

The Ajax Corporation has received a firm commitment from its underwriter to purchase 1 million shares of stock that will be marketed to the general public at $23 per share.The underwriter's spread is $1.90 per share and the issuing firm will pay an additional $1.65 million in legal and other fees.The issue was fully sold on the first day and the stock closed at $27.50 on that day.Calculate both the direct expense of issuance and the indirect (i.e., underpricing) expense.What % of the market value of the shares is represented by these costs?

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Definitions:

DSM-5

The Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition, a comprehensive classification and diagnostic tool used by mental health professionals.

Diagnostic Classification

Diagnostic classification refers to the systematic categorization of mental and physical health conditions based on standardized criteria and symptoms.

Mental Disorders

A wide range of conditions that affect mood, thinking, behavior, and functioning, often diagnosed according to standardized criteria.

Psychological Disorder

A disorder characterized by a set of psychological symptoms that significantly impact various aspects of life and well-being.