An Investment Banker Agrees to Underwrite an Issue of 10

Multiple Choice

An investment banker agrees to underwrite an issue of 10 million shares of stock for TWResearch, Inc. on a firm commitment basis. The investment banker pays $10.50 per share to TWResearch, Inc. for the 10 million shares of stock. It then sells those shares to the public for $11.20 per share. What is the profit (loss) to the investment banker?

A) Profit of $1,000,000.
B) Profit of $2,000,000.
C) Profit of $7,000,000.
D) Loss of $7,500,000.
E) Loss of $1,000,000.