An Investment Banker Agrees to Underwrite an Issue of 5

question 52

Multiple Choice

An investment banker agrees to underwrite an issue of 5 million shares of stock for NetChoice,Inc.on a best-efforts basis.The investment banker is able to sell 4.5 million shares for $31.00 per share and it charges NetChoice,Inc.$0.375 per share sold.
-What is the profit to the investment banker it sells 4.5 million shares for $29 per share?

• A)Profit of $1,687,500.
• B)Loss of $2,487,500.
• C)Profit of $1,875,000.
• D)Loss of $3,125,000.

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Definitions:

Monetary Policy

The process by which a central bank or monetary authority manages the supply of money and interest rates to achieve macroeconomic objectives such as controlling inflation, consumption, growth, and liquidity.

Fiscal Policy

Government policies concerning taxation and spending that are aimed at influencing macroeconomic conditions, including unemployment, inflation, and economic growth.

Fiscal Policy

Government policies related to taxation and spending aimed at influencing the economy.

MPC

Marginal Propensity to Consume, a metric in economics that measures the proportion of income changes that is spent on consumption.