Question
Having heard about IPO underpricing, I put in an order to my broker for 2,000 shares of every IPO he can get for me. After
Having heard about IPO underpricing, I put in an order to my broker for 2,000 shares of every IPO he can get for me. After 3 months, my investment record is as follows:
| IPO | Shares Allocated to Me | Price per Share | Initial Return | ||||||
| A | 700 | $ | 10 | 7 | % | ||||
| B | 500 | 20 | 13 | ||||||
| C | 2,000 | 8 | − | 1 | |||||
| D | 0 | 12 | 25 | ||||||
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.)
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Fundamentals of Corporate Finance
Authors: Richard Brealey, Stewart Myers, Alan Marcus
8th edition
77861620, 978-0077861629
