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Suppose a firm is doing an IPO and the investment bank offers to buy the securities for $34 per share with an offering price of

Suppose a firm is doing an IPO and the investment bank offers to buy the securities for $34 per share with an offering price of $42. What is the underwriter’s spread? Assume that the underwriter's cost of bringing the security to the market is $5 per share. What is its net profit?

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