Question
Two companies announced IPOs at the same time with prices $5 per share. Company A is undervalued by $10, company B is overvalued by $2.
Two companies announced IPOs at the same time with prices $5 per share. Company A is undervalued by $10, company B is overvalued by $2. You plan on buying 1,000 shares of each. Each will be allocated, and only a half of your order will be filled if oversubscription exists.
- If you could purchase 1,000 shares in company A and 1,000 shares in company B, what would you profit be?
- Calculate the actual dollar profit or loss.
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Public Finance A Contemporary Application of Theory to Policy
Authors: David N Hyman
11th edition
9781305474253, 1285173953, 1305474252, 978-1285173955
