The Wrigley Corporation needs to raise $26 million. The investment banking firm of Tinkers. Evers & Chance will handle the transaction.
a. If stock is utilized. 2, 200,000 shares will be sold to the public at $14.20 per share. The corporation will receive a net price of $12.00 per share. What is the percentage underwriting spread per share?
b. If bonds are utilized, slightly over 26, 400 bonds will be sold to the public at $1,002 per bond. The corporation will receive a net price of $993 per bond. What is the percentage of underwriting spread per bond?
c. Which alternative has the larger percentage of spread? Stock Bond c. Is this the normal relationship between the two types of issues?
Yes
No