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Business, 06.02.2021 01:00 skifchaofficial01

East Bay Semiconductor, Inc., currently a small private company, plans to go public via an initial public offering (IPO) and will issue 10 million shares of stock. It is hoping to sell the shares for an offer price of $25. It hires an investment bank, which suggests that the offer price for the stock should be $20 per share to ensure that all the shares can be easily sold. 5. What is the advantage of following the advice of the investment bankers? What is the disadvantage? Is the investment bank’s incentive to sell the shares aligned with the incentives of East Bay Semi? What trade-off does East Bay Semi face in this decision regarding the issue price? Briefly explain

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