question archive Profit or Loss on New Stock Issue Security Brokers Inc
Profit or Loss on New Stock Issue Security Brokers Inc
Subject:AccountingPrice: Bought3
Profit or Loss on New Stock Issue
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 shareNumber of shares:3 millionProceeds to Beedles:$14,000,000
The out-of-pocket expenses incurred by Security Brokers in the design and distribution of the issue were $310,000. What profit or loss would Security Brokers incur if the issue were sold to the public at the following average price?
A. $5 per share? Use minus sign to enter loss, if any.
$?
B. $6.75 per share? Use minus sign to enter loss, if any.
$?
C. $4 per share? Use minus sign to enter loss, if any.
$?
