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Question
An investment banker agrees to underwrite an issue of 10 million shares of stock for Rochester Industries on a best-efforts basis. The investment banker is able to sell 8 million shares for $10.50 per share, and it charges Rochester Industries $0.225 per share sold.
What is the profit to the investment banker it sells 8 million shares for $9.75 per share?
A. Profit of $1,000,000.
B. Loss of $7,500,000.
C. Profit of $7,000,000.
D. Loss of $7,000,000.
E. Profit of $1,800,000.
Answer
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