A Firm Is Making an Initial Public Offering

question 11

Multiple Choice

A firm is making an initial public offering. The investment bankers agree to a firm underwriting commitment of 500,000 shares priced to the public at $50 a share. The underwriter's spread is 12%. In addition, the underwriter charges $600,000 in legal fees. On the first day of trading, the firm's stock closed at $61. What were the total costs of the issue?

• A) $3,000,000
• B) $3,600,000
• C) $8,500,000
• D) $9,100,000

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Definitions:

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