Having heard about IPO underpricing, I put in an order to my broker for 1,000 shares of every IPO he can get for me. After 3 months, my investment record is as follows: IPO A B C D Shares Allocated to Me 500 200 1,000 0 Average underpricing Price per Share $10 20 12 Average initial return Initial Return 7% a. What is the average underpricing in dollars of this sample of IPOs? (Do not round intermediate calculations. Round your answer to 2 decimal places.) 12 % 2 23 b. What is the average initial return on my "portfolio" of shares purchased from the four IPOs that I bid on? When calculating this average initial return, remember to weight by the amount of money invested in each issue. (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)
Having heard about IPO underpricing, I put in an order to my broker for 1,000 shares of every IPO he can get for me. After 3 months, my investment record is as follows: IPO A B C D Shares Allocated to Me 500 200 1,000 0 Average underpricing Price per Share $10 20 12 Average initial return Initial Return 7% a. What is the average underpricing in dollars of this sample of IPOs? (Do not round intermediate calculations. Round your answer to 2 decimal places.) 12 % 2 23 b. What is the average initial return on my "portfolio" of shares purchased from the four IPOs that I bid on? When calculating this average initial return, remember to weight by the amount of money invested in each issue. (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Manshukh
Transcribed Image Text:Having heard about IPO underpricing, I put in an order to my broker for 1,000 shares of every IPO he can get for me. After 3 months,
my investment record is as follows:
LABUD
IPO
А
C
Shares
Allocated
to Me
500
200
1,000
0
Average underpricing
Price per
Share
$10
20
8
Average initial return
12
a. What is the average underpricing in dollars of this sample of IPOs? (Do not round intermediate calculations. Round your answer to
2 decimal places.)
Initial
Return
7%
12
- 2
23
b. What is the average initial return on my "portfolio" of shares purchased from the four IPOs that I bid on? When calculating this
average initial return, remember to weight by the amount of money invested in each issue. (Do not round intermediate calculations.
Enter your answer as a percent rounded to 1 decimal place.)
%
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