Which alternative has the larger percentage of spread

Reference no: EM131787785

Question: The Wrigley Corporation needs to raise $30 million. The investment banking firm of Tinkers, Evers, & Chance will handle the transaction.

a. If stock is utilized, 2,000,000 shares will be sold to the public at $15.70 per share. The corporation will receive a net price of $15 per share. What is the percentage underwriting spread per share?

b. If bonds are utilized, slightly over 30,000 bonds will be sold to the public at $1,001 per bond. The corporation will receive a net price of $992 per bond. What is the percentage of underwriting spread per bond? (Relate the dollar spread to the public price.)

c. Which alternative has the larger percentage of spread? Is this the normal relationship between the two types of issues?

Reference no: EM131787785

Questions Cloud

Compute the profit margin percentage : Compute the following relationships for each company: Debt to total assets ratio. Profit margin percentage (Return on sales), Return on assets

What will the percentage return be : Walton and Company is the managing investment banker for a major new underwriting. The price of the stock to the investment banker is $18 per share.

How the company will change its strategy to meet the needs : If this differs greatly from the company's existing market, explain how the company will change its strategy to meet the needs of this new market.

Product along one shelf of an aisle : A department store manager wants to display 6 brands of a product along one shelf of an aisle. In how many ways can he arrange the brands?

Which alternative has the larger percentage of spread : If stock is utilized, 2,000,000 shares will be sold to the public at $15.70 per share. The corporation will receive a net price of $15 per share.

What are two different possible reasons for the two modes : Knowing that there are usually fewer women who run marathons than men, and that more people ran in the amateur marathon.

Radio stations begin with k or w : Call letters The call letters for radio stations begin with K or W, followed by 3 additional letters. How many sets of call letters having 4 letters.

What were corporation earnings per share before the offering : Kevin's Bacon Company Inc. has earnings of $6 million with 2,000,000 shares outstanding before a public distribution.

Daily balances of the checking accounts : The daily balances of the checking accounts of its customers are normally distributed with an average of $280 and a standard deviation of $20.

User Account

All Pages