Why is underpricing not a great concern with bond offerings

Reference no: EM131424312

Underpricing in Debt Offerings Why is underpricing not a great concern with bond offerings? Use the following information to answer the next three questions. Eyetech Pharmaceuticals, Inc., a company that develops treatments for eye problems, went public in January 2004. Assisted by the investment bank Merrill Lynch, Eyetech sold 6.5 million shares at $21 each, thereby raising a total of $136.5 million. At the end of the fi rst day of trading, the stock sold for $32.40 per share, down slightly from a high of $33.00. Based on the end-of-day numbers, Eyetech shares were apparently underpriced by about $11 each, meaning that the company missed out on an additional $71.5 million.

Reference no: EM131424312

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