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3. More on the IPO process The IPO process involves several entities, such as the issuing company, institutional investors, brokers, lawyers, regulators, retail investors, and an intermediary company. Consider the following IPO deal: In 1999, Goldman Sachs Group and its partners, Sumitomo Bank Capital Markets Inc. and Kamehameha Activities Association, raised $3.5 billion through its initial public offering in the United States and Canada. Goldman Sachs & Co., Bear Stearns & Co. Inc., Credit Suisse First Boston Corporation, Lehman Brothers Inc., and J.P. Morgan Securities Inc. became some of the U.S. representatives of the deal by entering into an agreement to sell a certain number of shares to potential investors at a predetermined price. Identify one of the underwriters in the IPO deal described above. Credit Suisse First Boston Corp. Sumitomo Bank Capital Markets The underwriter in the IPO process has several responsibilities. True or False: The underwriter is likely to promote the shares by distributing analyst reports on the stoc associate brokerage house. False True Assume that a stock-issuing firm has a choice between a private placement selling the shares for $35.00 per share or a best efforts offering that will sell all available shares at the prices described in the following probability distribution: Best efforts expected probability distribution Probability Selling price Lowest quoted price 20% $32.00 Mid-range price 30% $36.00 Highest quoted price 50% $42.00 Assuming that the issue is fully subscribed, or sold, which method would generate the most capital for the issuing firm? Private placement Best efforts sale 3. More on the IPO process The IPO process involves several entities, such as the issuing company, institutional investors, brokers, lawyers, regulators, retail investors, and an intermediary company. Consider the following IPO deal: In 1999, Goldman Sachs Group and its partners, Sumitomo Bank Capital Markets Inc. and Kamehameha Activities Association, raised $3.5 billion through its initial public offering in the United States and Canada. Goldman Sachs & Co., Bear Stearns & Co. Inc., Credit Suisse First Boston Corporation, Lehman Brothers Inc., and J.P. Morgan Securities Inc. became some of the U.S. representatives of the deal by entering into an agreement to sell a certain number of shares to potential investors at a predetermined price. Identify one of the underwriters in the IPO deal described above. Credit Suisse First Boston Corp. Sumitomo Bank Capital Markets The underwriter in the IPO process has several responsibilities. True or False: The underwriter is likely to promote the shares by distributing analyst reports on the stoc associate brokerage house. False True Assume that a stock-issuing firm has a choice between a private placement selling the shares for $35.00 per share or a best efforts offering that will sell all available shares at the prices described in the following probability distribution: Best efforts expected probability distribution Probability Selling price Lowest quoted price 20% $32.00 Mid-range price 30% $36.00 Highest quoted price 50% $42.00 Assuming that the issue is fully subscribed, or sold, which method would generate the most capital for the issuing firm? Private placement Best efforts sale

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