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Profit or loss on a stock issue

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I am having problems trying to understand stock losses. If you were underwriting new issues to small firms and you had a recent offering on a company that had the following terms: Price to public $5 per share, Number of shares 3,000,000, Proceeds 14,000,000

If your out of pocket expenses incurred in the design and distribution of the issue were $300,000. What profit or loss would you incur if the issue were sold to the public at an average price of :

a) $5 per share
b) $6 per share
c) $4 per share

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Solution Summary

The solution explains how to calculate the profit or loss on a stock issue for an underwriter.

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