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.)
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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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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