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

question 51

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 percentage 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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