Use the following information to answer the question(s) below.
Wyatt Oil has 8 million shares outstanding and is about to issue 10 million new shares in an IPO. The IPO price has been set at $15 per share, and the underwriting spread is 6%. The IPO is a big success with investors, and the share price rises to $35 the first day of trading.
-The amount that Wyatt Oil pays as an underwriting spread closest to:

Question

Quizplus · Accepted Answer

The underwriting spread is 6% of the IPO price. The total amount raised from the IPO is 10 million shares * $15 = $150 million. The underwriting spread is 6% of $150 million, which is $9 million.

Use the Following Information to Answer the Question(s) Below