21-80 If the firm commitment price is $15 and one million shares are sold in the primary market for $13 and then resold in the secondary market for $13.25,what is the underwriter's profit/loss?

Question

Quizplus · Accepted Answer

The underwriter's profit/loss is calculated as the difference between the firm commitment price and the primary market sale price, multiplied by the number of shares. Here, the firm commitment price is $15, and the shares are sold for $13, resulting in a loss of $2 per share. For one million shares, the total loss is $2,000,000.

21-80 If the Firm Commitment Price Is $15 and One