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Assume Gum Shoe Detective Agency is thinking about three different size offerings for the issuance of additional shares. Size of offer Public price Net to
Assume Gum Shoe Detective Agency is thinking about three different size offerings for the issuance of additional shares.
Size of offer | Public price | Net to Corporation | |||||||||
$1.5 | million | $40 | $35.80 | ||||||||
$5.5 | million | $40 | $36.90 | ||||||||
$20.0 | million | $40 | $38.45 | ||||||||
a. What is the percentage underwriting spread for each size offering? (Round the final answers to 2 decimal places.)
a. | $1.5 million | % | |
b. | $5.5 million | % | |
c. | $20.0 million | % | |
b. What principle does this demonstrate?
multiple choice
Smaller the offer size, the lower the underwriting spread
Larger the offer size, the lower the underwriting spread
Larger the offer size, the higher the underwriting spread
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