Bank charging video for underwriting the stock issue

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1. JEN Corp. is expected to pay a dividend of $3.50 per year indefinitely. If the appropriate rate of return on this stock is 8 percent per year, and the stock consistently goes ex-dividend 20 days before dividend payment date, what will be the expected maximum price in light of the dividend payment logistics?

$43.75

$47.05

$40.07

$43.57

2. Calculating Costs of Issuing Stock Video Games, Inc., with the help of its investment bank recently issued 10.17 million shares of new stock. The offer price on the stock was $48.35 per share and Video's received a total of $463,500,000 through this stock offering. Calculate the net proceeds and the underwriter's spread on the stock offering. What percentage of the gross price is the investment bank charging Video for underwriting the stock issue? (Round your intermediate calculations and final answer to 2 decimal places.)

8.50%

2.77%

28.65%

5.73%

Reference no: EM131346492

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