Question

Assuming that the issue is fully subscribed, or sold, which method would generate the most capital for the issuing firm

Answer 1

Best effort sale

Step-by-step explanation:

In the case when the issue is either fully sunscribed or sold so the method than generate the more capital for the firm i.e. issue is best effort sale

But before that we have to compute the weighted average price i.e.

= $32 × 0.2+ $36 × 0.3 + $42 × 0.5

= $6.4 + $ 10.8 + $21

= $38.2

As the weighted average price is more than the $36 so the best effor sale should be selected