Having heard about IPO underpricing, I put in an order to my broker for 1,160 shares of every IPO he can get for me. After 3 months, my investment record is as follows: Shares Allocated ΙΡΟ to Me Price per Share Initial Return A 660 $12 B 360 22 7% 15 C 1,160 10 - 4 D 0 14 20 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.) Average underpricing 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 1,160 shares of every IPO he can get for me. After 3 months, my investment record is as follows: Shares Allocated ΙΡΟ to Me Price per Share Initial Return A 660 $12 B 360 22 7% 15 C 1,160 10 - 4 D 0 14 20 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.) Average underpricing 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.)
Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter13: Corporations: Organization, Stock Transactions, And Dividends
Section: Chapter Questions
Problem 4CP
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![Having heard about IPO underpricing, I put in an order to my broker for 1,160 shares of every IPO he can get for me. After 3 months, my
investment record is as follows:
Shares
Allocated
IPO
to Me
Price per
Share
Initial
Return
A
660
$12
7%
B
с
360
1,160
22
15
10
D
0
14
- 4
20
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.)
Average underpricing
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.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F31c756a5-242f-4976-b7fb-c64a4c14e255%2Fa17b6605-0c9d-4857-bcd1-7af47fe2b29c%2Floekued_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Having heard about IPO underpricing, I put in an order to my broker for 1,160 shares of every IPO he can get for me. After 3 months, my
investment record is as follows:
Shares
Allocated
IPO
to Me
Price per
Share
Initial
Return
A
660
$12
7%
B
с
360
1,160
22
15
10
D
0
14
- 4
20
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.)
Average underpricing
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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