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An investment bank has been asked to underwrite an issue of 10 million shares by a company. It is trying to decide between a firm
An investment bank has been asked to underwrite an issue of 10 million shares by a company. It is trying to decide between a firm commitment where it buys the shares for $10 per share and a best efforts where it charges a fee of 20 cents for each share sold. Explain the pros and cons of the two alternatives.
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