Richard has an outstanding order with his stock broker to purchase 1,000 shares of every IPO. The next three IPOs are each priced at $30 a share and will all start trading on the same day. Richard is allocated 1,000 shares of IPO A, 400 shares of IPO B, and 100 shares of IPO C. On the first day of trading IPO A opened at $31.50 a share and ended the day at $28.25 a share. IPO B opened at $31 a share and finished the day at $32 a share. IPO C opened at $36.50 a share and ended the day at $38.75 a share. What is Richard's total profit or loss on these three IPOs as of the end of the first day of trading?
Total profit = [1,000 × ($28.25 - $30)] + [400 × ($32 - $30)] + [100 × ($38.75 - $30)] = -$75
|
60.
|
Two IPOs will commence trading next week. Scott places an order to buy 300 shares of IPO A. Steve places an order to purchase 300 shares of IPO A and 300 shares of IPO B. Both IPOs are priced at $20 a share. Scott is allocated 100 shares of IPO A. Steve is allocated 100 shares of IPO A and 300 shares of IPO B. At the end of the first day of trading, IPO A is selling for $22.70 a share and IPO B is selling for $18.60 a share. What is the difference in the total profits or losses that Scott and Steve have as of the end of the first day of trading?
Scott's profit = 100 × ($22.70 - $20) = $270
Steve's profit = [100 × ($22.70 - $20)] + [300 × ($18.60 - $20)] = -$150 Difference = $270 - (-$150) = $420 |
61.
|
Wear Ever is expanding and needs $12.6 million to help fund this growth. The firm estimates it can sell new shares of stock for $35 a share. It also estimates it will cost an additional $340,000 for filing and legal fees related to the stock issue. The underwriters have agreed to a 7 percent spread. How many shares of stock must Wear Ever sell if it is going to have $12.6 million available for its expansion needs?
Total value of issue = ($12,600,000 + $340,000)/(1 - 0.07) = $13,913,978.49
Number of shares needed = $13,913,978.49/$35 = 397,542.24 shares |
No comments:
Post a Comment