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

question 41

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 percentage 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:

Public Good

An item or service made available to all societal members at no cost, regardless of profit, by either governmental bodies or private individuals or groups.

Common Good

A concept referring to either policies or infrastructure that benefit all members of a community or society.

External Good

Often misinterpreted; should likely be "external good," relating to positive externalities, benefits received by those not directly involved in a transaction.

Nonrival-in-consumption

A property of a good whereby one person's consumption does not diminish the utility of that good for others.