A firm goes public. The firm receives $36.50 for each of the 7.25 million shares sold. The initial offering price was $38.75 per share, and the stock rose to $42.65 per share is the first few minutes of trading.  The firm paid $2,285,000 in direct legal and other costs and $988,000 in indirect cost. What was the total for underpricing of this offer?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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A firm goes public. The firm receives $36.50 for each of the 7.25 million shares sold. The initial offering price was $38.75 per share, and the stock rose to $42.65 per share is the first few minutes of trading.  The firm paid $2,285,000 in direct legal and other costs and $988,000 in indirect cost. What was the total for underpricing of this offer?

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