Great Cyrus Ltd had its initial public offer (IPO) of shares on the 1^st of June 2019. The company had 40,000,000 shares on issue before the offer. The share offer was underwritten by Achaemenid Investments, with total costs of 5 percent of the offer value. The share offer consisted of 10,000,000 newly issued shares (no shares were sold by the existing shareholders in this offer). The share offer (subscription) price was $4.00 per share. Subscriptions received by the underwriters at the offer close date were for a total of 10,000,000 shares. Market share values were as follows:

First day close price was $4.80.

First year anniversary share price was $6.20 (in the corresponding period, the market index return was 17.5 percent, while the company's relevant industry index provided 14.5 percent return). Additionally, assume that the market systematic risk beta=1, industry index beta=0.8 and the company beta=0.9.

Based on the above scenario answer the following questions:

i. From the IPO company's perspective, is the share offer under-priced or over-priced and by how much by the end of the first trading day?

ii.What is the amount raised by the offer (after underwriting costs)? How much has the underwriter earned from the IPO?

iii.Briefly comment on the listing day and subsequent returns performance of this initial public offer: 1) from the original owner's perspective (i.e. those investors who held shares before the IPO was initiated), and

2) from the perspective of investors who bought into this IPO company at the offer subscription price.