Calculating Costs of Issuing Stock Amy's Accessories, Inc

question 90

Multiple Choice

Calculating Costs of Issuing Stock Amy's Accessories, Inc., needs to raise $10 million to finance plant expansion. In discussions with its investment bank, Amy's learns that the bankers recommend an offer price (or gross proceeds) of $25 per share and Amy's will receive $23 per share. What is the underwriter's spread on the issue?

• A) $0
• B) $2
• C) $23
• D) $25

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