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Chapter 5: Q8BP (page 495)

Assume Sybase Software is thinking about three different size offerings for issuance of additional shares.


Size of Offer
Public Price 		Net to Corporation
1.1 million鈥︹�︹�︹�︹�� \(30 \)27.50
7.8 million鈥︹�︹�︹�︹�� \(30 \)28.44
28.0 million鈥︹�︹�︹�︹��
 \(30 \)29.15

What is the percentage underwriting spread for each size offer?

Short Answer

Expert verified

Percentage underwriting spread for offer:

  1. 8.33%
  2. 5.2%
  3. 2.83%

Step by step solution

01

Computation of percentage underwriting spread for offer a

Offer a.

Spread=Publicprice-Net tocorporation=$30-$27.50=$2.50Percentage spread=SpreadPublic price脳100=$2.50$30脳100=8.33%

02

Computation of percentage underwriting spread for offer b

Offer b.

Spread=Publicprice-Net tocorporation=$30-$28.44=$1.56Percentage spread=SpreadPublic price脳100=$1.56$30脳100=5.2%

03

Computation of percentage underwriting spread for offer c

Offer c.

Spread=Publicprice-Net tocorporation=$30-$29.15=$0.85Percentage spread=SpreadPublic price脳100=$0.85$30脳100=2.83%

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