1) 2 bonds: One municipal bond with a 3.5% yield and one corporate bond with a 5% yield. Tax rate is 40%. Which bond are you willing to buy?
2) Goldman-led Twitter underwriters share $59.2 million in IPO fees. That's 3.25% of the $1.82 billion that Twitter raised in its IPO.
Twitter's 70 million IPO shares rose to $44.90 per share at the close in New York from the initial public offering price of $26.
a. What is your best guess as to the total cost to Twitter of the equity issue?
b. Is the entire cost of the underwriting a source of profit to the underwriters?
Please answer questions 1 and 2. Question 2 has 2 parts. Please show work if necessary or provide explanation if needed.