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Question 1014  book build, initial public offering, capital raising, demand schedule

A firm is floating its stock in an IPO and its underwriter has received the following bids, listed in order from highest to lowest share price:

IPO Book Build Bids
Bidders Share price Number of shares
  $/share millions
BidderA 2.5 2
BidderB 2 1.5
BidderC 1.5 4
BidderD 1 3
BidderE 0.5 2
 

 

Suppose that the firm's owner wishes to raise $6 million to expand the business by selling new stock in the initial public offering (IPO). The owner currently holds 8 million stock which are not for sale. Which of the following statements is NOT correct?