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Your firm has 1 0 million shares outstanding, and you are about to issue 5 million new shares in an IPO. The IPO price has

Your firm has

10

million shares outstanding, and you are about to issue

5

million new shares in

an IPO. The IPO price has been set at $

20

per share, and the underwriting spread is

7 % .

The

IPO is a big success with investors, and the share price rises to $

50

the first day of trading.

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