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Two companies have announced IPOs at the same time with offering prices of $5 per share. Company A is undervalued by $10, company B is
Two companies have announced IPOs at the same time with offering prices of $5 per share. Company A is undervalued by $10, company B is overvalued by $2. As an average investor, you're uninformed about the true firm valuation of these two firms. You plan on purchasing 2,000 shares of each issue. Shares offered by each company will be allocated, and only a half of your order will be filled if there is oversubscription. 2-1. If you could purchase 2,000 shares in company A and 2,000 shares in company B, what would your profit be? (2 marks) Answer: $ 2-2. Calculate your actual dollar profit or loss. (3 marks) Answer: $
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