Otel corporation agreement with investment banker
Not what you're looking for?
Question 1. Otel Corporation entered into an agreement with its investment banker to sell 15 million shares of the company's stock with Otel netting $270 million dollars from the offering. The out-of-pocket expenses incurred by the investment banker were $5,000,000.
a. What profit or loss would the investment banker incur if the issue sold to the public at an average price of $25 per share?
b. What profit or loss would the investment banker incur if the issue were sold to the public at an average price of $15 per share?
c. Is this an example of a negotiated deal or best efforts? Why? Who bears the greater risk, the investment banker or the company? Why?
d. If the investment banker agrees to handle the issue on a best efforts basis, earning 7.5 percent of the proceeds, calculate the investment banker's profit or loss if all 15 million shares are sold at an average price of $15. How much will the company receive?
e. Who bears the greater risk in a best efforts deal, the investment banker or the company? Why?
Please show work for all problems.
Purchase this Solution
Solution Summary
-Otel corporation
-best deal vs negotiated deal
-calculation of gain or loss
Purchase this Solution
Free BrainMass Quizzes
Social Media: Pinterest
This quiz introduces basic concepts of Pinterest social media
Organizational Behavior (OB)
The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.
MS Word 2010-Tricky Features
These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.
Income Streams
In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.