The Wrigley Corporation needs to raise $45 million. The investment banking firm of Tinkers, Evers & Chance will handle the transaction.

a.If stock is utilized, 2,500,000 shares will be sold to the public at $21.00 per share. The corporation will receive a net price of $18.00 per share. What is the percentage underwriting spread per share?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

b.If bonds are utilized, slightly over 45,000 bonds will be sold to the public at $1,008 per bond. The corporation will receive a net price of $995 per bond. What is the percentage of underwriting spread per bond? (Relate the dollar spread to the public price.)(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

c-1.Which alternative has the larger percentage of spread?

• Stock
• Bond

c-2.Is this the normal relationship between the two types of issues?

• Yes
• No