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2. The Bread.Com Co. just had an Initial Public Offering (IPO). The company sold all the shares to an underwriter at $10 per share. On

2. The Bread.Com Co. just had an Initial Public Offering (IPO). The company sold all the shares to an underwriter at $10 per share. On the day of the IPO, the underwriter sold the common stocks to investors at the offer price of $11 per share. At the end of the offer date, the stocks were traded at $15 per share.

(a)What is the percentage underwriter spread for this stock?

(b)Calculate the percentage of IPO underpricing for the Bread.Com.

3. What is the book-building process for an IPO?

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