Ajax Corporation Has Received a Firm Commitment from Its Underwriter

question 108

Essay

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. What percentage of the market value of the shares is lost to issue costs?

---

Definitions:

Great Recession

A severe global economic downturn that began in 2007 and lasted until 2009, marked by significant declines in economic activity worldwide.

Unemployment Rate

The share of the labor force that has no job but is in active pursuit of employment.

Output

The total amount of goods and services produced by an economy over a specific period of time.

National Debt

This is the total amount of money that a country's government has borrowed and still owes.