Walton and Company is the managing investment banker for a major new underwritin

Question

Walton and Company is the managing investment banker for a major new underwriting. The price of the stock to the investment banker is $17 per share. Other syndicate members may buy the stock for $19.25. The price to the selected dealers group is $21.80, with a price to brokers of $22.20. Finally, the price to the public is $22.50.

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

b=If Walton and Company also performs the dealer%u2019s function 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?

round to 2 decimal places

Explanation / Answer

a)21.80-17 = 4.8

4.8/17 = 28.24 %

b)22.20 - 17 = 5.2

5.2/17 = 30.59%

c)22.50 -17 = 5.5

5.5/17 = 32.35 %

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