DRK, Inc., has just sold 100,000 shares in an initial public offering. The underwriter’s explicit fees were $60,000. The offering price for the shares was $40, but immediately upon issue, the share price jumped to $44. a. What is the total cost to DRK of the equity issue? b. Is the entire cost of the underwriting a source of profit to the underwriters? multiple choice Yes No

a. $460,000 ; b. No

Explanation:

a. What is the total cost to DRK of the equity issue?

First, we calculate the implicit cost per share which will be:

= $44 - $40 = $4.

Therefore, the total implicit cost will be:

= $4 × 100,000

= $400,000

Therefore, total cost to DRK of the equity issue will be:

= Implicit cost + Explicit cost

= $400,000 + $60,000

= $460,000

b. Is the entire cost of the underwriting a source of profit to the underwriters?

No. The entire cost of the underwriting would not be a source of profit to the underwriters. This is because the cost of underpricing isn't included.

the effect is that geography has alot to do with how level the ground is and how structurally safe it is. it can also show like cracks in the ground and if mountains are safe to be by. hope this