Blaine and Company is the managing investment banker for a major new Other synd icate members may buy the stock for $24.30. The price to the hare underwriting. The price of the stock to the investment banker is $24 per selected dealers group is $24.90, with a price to brokers of $25. 32. The price to the public is $25.60 a. If Blaine and Company sells its shares to the dealer group, what will be the percentage return? b. If Blaine and Company performs the dealer's function also and sells to brokers, what will be the percentage return? c. If Blaine and Company fully integrates its operation and sells directly to the oublic, what will be the percentage return? Solution: Blaine and company a.$24.90 Selected dealer group's price 24.00 Managing investing banker's price s 90 Differentia 90=3.75% Return $2400 b $25.32 Broker's price 24.00 Managing investment banker's price S 1.32 Differential $132 5.5% Return $24.00 c $25.60 Public price 24.00 Managing investment banker's price S 1.60 Differentia $160=667% Return $2400 CopyrightC 2005 by The McGray-Hill Companies, Inc.Copyright © 2005 by The McGraw-Hill Companies, Inc. S-532 15-6. Blaine and Company is the managing investment banker for a major new underwriting. The price of the stock to the investment banker is $24 per share. Other syndicate members may buy the stock for $24.30. The price to the selected dealers group is $24.90, with a price to brokers of $25.32. The price to the public is $25.60. a. If Blaine and Company sells its shares to the dealer group, what will be the percentage return? b. If Blaine and Company performs the dealer's function also and sells to brokers, what will be the percentage return? c. If Blaine and Company fully integrates its operation and sells directly to the public, what will be the percentage return? Solution: Blaine and Company a. $24.90 Selected dealer group's price 24.00 Managing investing banker's price $ .90 Differential $ .90 = 3.75% Return $24.00 b. $25.32 Broker’s price 24.00 Managing investment banker's price $ 1.32 Differential $ 1.32 = 5.5% Return $24.00 c. $25.60 Public price 24.00 Managing investment banker's price $ 1.60 Differential $ 1.60 = 6.67% Return $24.00