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1. A company offers 40,000 shares of common stock to the public in in IPO. The underwriters agree to provide their services in a best
1. A company offers 40,000 shares of common stock to the public in in IPO. The underwriters agree to provide their services in a best efforts underwriting agreement. The offer price is set at $28. The gross spread is $3. After completing their sales efforts, the underwriters determine that they were able to sell a total of 36,750 shares. How much cash did the issuer receive from the IPO?
2. How would your answer to question 1 above change if the agreement between the issuer and the underwriter was based on firm commitment?
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