The Woods Co. and the McIlroy Co. have both

announced IPOs at $40 per share. One of these is undervalued by $9.50, and

the other is overvalued by $5.25, but you have no way of knowing which is

which. You plan on buying 1,000 shares of each issue. If an issue is

underpriced, it will be rationed, and only half your order will be filled. If

you could get 1,000 shares in Woods and 1,000 shares in McIlroy, what

would your profit be? What profit do you actually expect? What principle

have you illustrated?