1 An underwriter issues a firm commitment to sell 1 million

1. An underwriter issues a firm commitment to sell 1 million shares at $20 each, including a $2 spread. How much does the issuing firm receive if only 500,000 shares are sold?

A. $9 million

B. $10 million

C. $18 million

D. $20 million

Pleas show calculation

1. Amount received by Firm = Total Value - Spread

2. Total Value = 500,000 X $ 20 = $ 10 Million

3. Spread = 500,000 X $2 = $ 1 Million

4. Amount received by Firm = $ 9 Million

So A. $9 million

1. An underwriter issues a firm commitment to sell 1 million shares at $20 each, including a $2 spread. How much does the issuing firm receive if only 500,000 s

1 An underwriter issues a firm commitment to sell 1 million

Solution

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