Which of the following statements is most correct? a. Flotation coats under a best-efforts arrangement are typically less for a given new equity issue than the cost a associated with an underwritten offering and the corporation is more certain of getting the needed funds under a best-efforts offering. This is way best efforts deals are most common. b. If a firm decides to issue securities through a direct (or private) placement then the underwriting syndicate that is formed to discretion, that securities to the public may at its discretion decide either to guarantee or not to guarantee the sale of the securities. c. If the demand curve for a firm stock is relatively flat, the firm will have a more difficult time raising a large amount of new equity funds for expansion than would be true if this demand curve were steeper d. It is possible for a firm to go public, and yet not raise any additional capital. Basie Buildings Inc. decided to go public with a $5,000,000 new equity issue at the beginning of May, 2015. Its investment bankers agreed to take a smaller fee now (6 percent of par value versus 10 percent) in exchange for a 1-year option to purchase an additional 200,000 shares of the company at $5.00 per share. The investment banking firm expects to exercise its option and purchase the 200,000 shares in exactly one year's time when the stock price is expected to be $6.50 per share. However, if the stock price is actually $12.00 per share one year from now, what is the present value of the entire underwriting agreement to the invest banker? Assume that the investment banker required return on such arrangements is 15 percent and ignore any tax considerations a. $ 300,000 b. $ 642, 782 c. $1, 400,000 d. $1, 700,000 e. $1, 517, 391