1. The three possible outcomes of an investemtn are listed below. All outcomes are equally likely. Calculate the average profit variation and the standard deviation of this invesment.
Profit
- Best case +$400
- Most likely +$150
- Worst likely -$300
2. Gus Games stock currently sells for $50 per share. There are 4 million shares currently outstanding. The company announces plans to raise $5 million by offering shares to the public at a price of $45 per share.
a.) If the underwriring spread is 4%, how many shares will the company need to issue in order to be left with the net proceeds of $5 million?
b.)If other adminstrative costs are $90,000, what is the dollar value of the total direct costs of the issue?