What Percentage of Direct Expense Is Required to Market Stock

question 96

Multiple Choice

What percentage of direct expense is required to market stock if 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?

• A) 6.98%
• B) 7.19%
• C) 7.75%
• D)8.33%

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Definitions:

Express Warranties

Explicit guarantees provided by a seller to a buyer regarding the quality, performance, or specifications of a product or service.

Implied Warranties

Legal assurances that are not explicitly stated but are assumed in the sale of goods, suggesting they will function as expected.

Transaction

A business deal or action, such as buying or selling, between two or more parties.

Warranty

A warranty is a guarantee provided by a seller to a buyer, promising to repair or replace a product if it fails within a certain period after purchase.