Question
Wallace Publishing recently completed its IPO. The stock was offered at a price of $ 17.00 per share. On the first day of trading, the
Wallace Publishing recently completed its IPO. The stock was offered at a price of $ 17.00 per share. On the first day of trading, the stock closed at
$ 22.00 per share. What was the initial return on Wallace?
Who benefited from this underpricing? Who lost, and why?
What was the initial return on Wallace?
The initial return was ____ %. (Round to one decimal place.)
Who benefited from this underpricing?(Select the best choice below.)
A.The company, underwriters.
B.The company, owners of other shares outstanding (not part of the IPO).
C.Owners of other shares outstanding (not part of the IPO), underwriters.
D.Investors who bought shares at the IPO price of $17.00 /share, investment banks (indirectly from future business).
Who lost?(Select the best choice below.)
A.Owners of other shares outstanding (part of the IPO).
B.Owners of other shares outstanding (not part of the IPO).
C.Both of the above.
D.Investors who bought shares at the IPO price of $ 17.00/share,
investment banks (indirectly from future business).
Why? (Select the best choice below.)
A.The original shareholders who participated in the IPO sold shares at what the market was willing to pay.
B.The original shareholders who participated in the IPO sold shares above what the market was willing to pay.
C.The original shareholders who participated in the IPO sold shares below what the market was willing to pay.
D.None of the above.
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