Profit or Loss on New
Stock Issue Security Brokers Inc. specializes in underwritingnew issues by small firms. On a recent offering of Beedles Inc.,the terms were as follows:
Price to public: $5 per share
Number of shares: 3 million
Proceeds to Beedles: $14,000,000
The out-of-pocket expenses incurred by Security Brokers in thedesign and distribution of the issue were $290,000. What profit orloss would Security Brokers incur if the issue were sold to thepublic at the following average price?
A. $4.75 per share? Use minus sign to enter loss, if any.
$____
B. $6.50 per share? Use minus sign to enter loss, if any.
$____
C. $4.25 per share? Use minus sign to enter loss, if any.
$____
