ABC Underwriters Has Agreed to a Firm Commitment Underwriting in Which

Multiple Choice

ABC Underwriters has agreed to a firm commitment underwriting in which they will pay you $20.75 million in exchanging for 2 million shares of stock for an IPO offering for your company. The offering price is expected to be $11 a share. If ABC can sell all of the shares, they will earn underwriting fee of ___________.

A) $1.00 million
B) $1.25 million
C) $1.50 million
D) $2.00 million
E) $2.50 million