Assignment:
FBN Inc. has just sold 100,000 shares in an initial public offering. The underwriter's explicit fees were $70,000. The offering price for the shares was $50, but immediately upon issue the share price jumped to $53. (a) What is your best guess as to the total cost to FBN of the equity issue? (b) Is the entire cost of the underwriting a source of profit to the underwriters?