Question
Your firm has 10 million shares outstanding, and you are about to issue 5 million new shares in an IPO. The IPO price has been
Your firm has 10 million shares outstanding, and you are about to issue 5 million new shares in an IPO. The IPO price has been set at $20 per share, and the underwriting spread is 7%. The IPO is a big success with investors, and the share price rises to $50 on the first day of trading.
-
what is the total IPO cost to the firms original investors?
-
Who lost from underpricing? Who benefited? Explain.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Recession Proof Setups 21 Proven Stock Market Trading Strategies In A Bear Market
Authors: Matthew Giannino
1st Edition
1734554037, 978-1734554038
