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25 April, 06:46

A hospital revenue bond issue is being underwritten on a negotiated basis. The offering consists of $20,000,000 par value of term bonds. The underwriter has agreed to a spread of $30.00 for each $5,000 bond. The manager has set the additional takedown at $12.00 per bond and the selling concession at $15.00 per bond. If a selling group member sells a $5,000 par value bond directly to the public, the selling group member earns:

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  1. 25 April, 09:50
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    The selling group member earns $12 on that sale

    Explanation:

    When selling a bond directly to the public, a group member earns a total takedown which is the total of the additional takedown plus the selling concession.

    $12 + $15

    = $27

    Now if a selling group member finds a customer, then $15 which is the selling concession is given up leaving the member to earn $12 (the additional takedown) on that sale.
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