Question: 5 . Consider two upcoming IPOs. The Pool Shark Inc. ' s IPO is undersubscribed and so all bidders are allocated all the shares they
"Consider two upcoming IPOs. The Pool Shark Inc.s IPO is undersubscribed and so all bidders are allocated all the shares they ordered. In contrast, the Drop Dead Corp.s IPO is oversubscribed and so the bidders receive only of the shares they ordered. Both IPOs are priced at $ per share, but the true value per share of Drop Dead is $ and the true value per share of Pool Shark is $ JB does not know the true values and, therefore, he has placed orders for shares in each of these two IPOs. Find JBs firstday percentage return assuming the prices on the first day of trading are equal to the firms' true values."
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