Big Easy Investment Banking, Inc., participates in a Western account underwriting of $10 million of municipal bonds by agreeing to underwrite 10% of the issue. One week later, $4 million remains unsold but Big Easy has distributed $1.5 million of bonds.
What is the liability of Big Easy remaining in the account?
- $0
- $400,000
- $600,000
- $1,000,000
Answer(s): D
Explanation:
$1,000,000. In a Western account, each underwriter has divided liability and each is responsibility only for his respective part. In this case, Big Easy is responsible for 10% of $10,000,000 - or $1,000,000.
Reveal Solution
Next Question