An IPO Was Priced to Sell at $23 a Share

question 26

Multiple Choice

An IPO was priced to sell at $23 a share and closed at $22 a share at the end of the first day of trading.The underwriting spread was 7% of the offer price and the legal,accounting and administrative costs were $160,000.What was the total percentage cost of the issue as a percentage of the market value at the end of the first day if 250,000 shares were offered?

• A) 3.89%
• B) 5.68%
• C) 4.21%
• D) 3.64%

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