Question 1: Security 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
Question 2: The out-of-pocket incurred by Security Brokers in the design and distribution of the issue were $300,000. What profit of loss would Security Brokers incur if the issue were sold to the public at an average price of:
a. $5 per share
b. $6 per share
c. $4 per share