Foundations of Financial Management
Foundations of Financial Management
16th Edition
ISBN: 9781259277160
Author: Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen
Publisher: McGraw-Hill Education
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Chapter 15, Problem 9P

Walton and Company is the managing investment banker for a major new underwriting. The price of the stock to the investment banker is $ 23 per share. Other syndicate members may buy the stock for $ 24.25. The price to the selected dealers group is $ 24.80, with a price to brokers of $ 25.20. Finally, the price to the public is $ 29.50.

a. If Walton and Company sells its shares to the dealer group, what will the percentage return be?

b. If Walton and Company performs the dealer’s function also and sells to brokers, what will the percentage return be?

c. If Walton and Company fully integrates its operation and sells directly to the public, what will its percentage return be?

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