An Investment Banker Agrees to Underwrite an Issue of 10

question 110

Multiple Choice

An investment banker agrees to underwrite an issue of 10 million shares of stock for Rochester Industries on a best-efforts basis.The investment banker is able to sell 8 million shares for $10.50 per share,and it charges Rochester Industries $0.225 per share sold.
-If the investment bank can sell the shares for $9.75 per share,what is the profit (loss) to the investment banker?

• A)Profit of $1,000,000.
• B)Loss of $7,500,000.
• C)Profit of $7,000,000.
• D)Loss of $7,000,000.

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