Incorp has just sold 20 million shares through an IPO offering. The shares were offered at $20.00 a share and all of the shares were sold. The firm received a total of $422,000,000 for this issue. What was the spread?

Question

Quizplus · Accepted Answer

The spread is the difference between what the firm received and the price at which the shares were sold, expressed as a percentage of the sales price. The firm received $422,000,000 for shares that were sold at $20.00 each, totaling $400,000,000 (20 million shares * $20.00). The difference is $22,000,000 ($422,000,000 - $400,000,000). The spread as a percentage is ($22,000,000 / $400,000,000) * 100% = 5.5%.

Incorp Has Just Sold 20 Million Shares Through an IPO