The out-of-pocket expenses incurred by security brokers in


Secruity Brokers INC. specializes in underwriting new issues by small firms. On a recent offering of Beedles Inc., the terms were as follows:

Price to public $5 per share
Number of shares 3 million
Proceeds to Beedles $14,000,000

The out-of-pocket expenses incurred by Security Brokers in the design and distribution of the the issue were $300,000. What profit or loss would security brokers incur if the were sold to the public at the foloowing average price?

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

 

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Finance Basics: The out-of-pocket expenses incurred by security brokers in
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