Four companies conducted IPOs last month: Hot.Com, Biotech Pipe Dreams Corp., Sleepy Tyme Inc., and Bricks N
Question:
Company First-Day Return
Hot.Com ............ 45%
Biotech Pipe Dreams ........ 30%
Sleepy Tyme ............ 5%
Bricks N Mortar............. 0%
a. If you submitted a bid through your broker for 100 shares of each company, if your orders were filled completely, and if you cashed out of each deal after one day, what was your average return on these investments?
b. Next, suppose your orders were not all filled completely because of excess demand for hot IPOs. Specifically, after ordering 100 shares of each company, you were able to buy only 10 shares of Hot.Com, 20 shares of Biotech Pipe Dreams, 50 shares of Sleepy Tyme, and 100 shares of Bricks N Mortar. Recalculate your average return, taking into account that your orders were only partially filled.
Broker
A broker is someone or something that acts as an intermediary third party, managing transactions between two other entities. A broker is a person or company authorized to buy and sell stocks or other investments. They are the ones responsible for...
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Introduction to Corporate Finance What Companies Do
ISBN: 978-1111222284
3rd edition
Authors: John Graham, Scott Smart
Question Posted: