What direct expense is required to market stock if the issuer incurs $1 million in other expenses to sell 3 million shares at $40 each to an underwriter and the underwriter sells the shares at $43 each?

Name: What direct expense is required to market stock if the issuer incurs $1 million in other expenses to sell 3 million shares at $40 each to an underwriter and the underwriter sells the shares at $43 each?
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Question

Quizplus · Accepted Answer

Direct expense % = {$1m + [($43 − 40) × 3m]} / ($43 × 3m) = 0.0775, or 7.75%

What Direct Expense Is Required to Market Stock If the Issuer