Fair treatment of clients requires that ipo shares

Assignment Help Business Management
Reference no: EM131234319

1. Fair treatment of clients requires that IPO shares are distributed on a pro rata basis-the number of shares allocated to the investment manager are allocated to appropriate client portfolios in proportion to the size of the client's portfolio. Client portfolios are deemed appropriate if the IPO fits the risk-return and other investment characteristics specified in each client's investment policy statement.

An alternative allocation could be equal distribution. The following questions allow you to think about the ethical issues in allocating IPOs to client accounts Suppose a manager is allocated 4,000 shares of an IPO offered at $20 a share but closes at $25 a share on the first day of trading. The manager identifies three client accounts that are appropriate for the IPO allocation. These accounts are in the amount of $1 million, $5 million, and $10 million. The manager plans to take whatever amount is needed out of the account to provide the client with the IPO allocation at the IPO offer price. Assume that all of the assets remaining in all three accounts earn 10 percent. Calculate the return to each account depending on whether the shares are allocated equally or on a pro rata basis. Which method do you think is most equitable, and why?

Reference no: EM131234319

Questions Cloud

Create a blueprint for managing a complex development : You'll create a blueprint for managing a complex development team's progress, steering team members away from negative conflicts and toward productive discussion. You'll also be asked to help create a new message for executives so they can lead ef..
What is ytm of a 5 year zero bond : What is YTM of a 5-year zero-bond that costs $1,000 today and promises to pay $1,611? - ompute the yield-to-maturity of a two-year bond that costs $25,000 today and pays $1,000 at the end of each of the 2 years.
What types of policy interventions might help restore : Why might it help to supplement national income data with other indices of quality of life in such countries? What other indices might be used?
Plot the npvs as a function of the prevailing interest rate : For the following projects, plot the NPVs as a function of the prevailing interest rate and determine the appropriate IRRs.
Fair treatment of clients requires that ipo shares : 1. Fair treatment of clients requires that IPO shares are distributed on a pro rata basis-the number of shares allocated to the investment manager are allocated to appropriate client portfolios in proportion to the size of the client's portfolio. ..
What is meant by the danger of over-investment : The tale of the throwaway DVD player, however, may yet return to haunt Chinese industry.
What is the four stroke compression cycle : What difference does displacement make in an internal combustion engine? What are three advantages and disadvantages to having an eight cylinder engine when compared to a four cylinder engine? What is an internal combustion engine supposed to do?
Does the npv rule recommend the same action : Your cost of capital is 30% per annum.  - Use the IRR rule to determine whether you should take this project. Does the NPV rule recommend the same action?
Second year payments will be applied towards interest : If you buy a car that costs $19,145 with a 6-year amortized car loan that has a 5.30% nominal interest rate with monthly payments, how much of your second year's payments will be applied towards interest?

Reviews

Write a Review

Business Management Questions & Answers

  How does hedging workexplain and give an example of how

how does hedging work?explain and give an example of how hedging works? why does hedging provide price protection? why

  Knowledge and value creation in the new economy

Knowledge and Value Creation in the New Economy - How can organizational knowledge contribute to value creation for an organization in the new economy?

  Efficient revenue management

What would efficient revenue management imply for the pricing of the Cowboys Stadium parking lot on typical game days? How about for the Super Bowl? How about for the many smaller events that fill less than half the lot?

  Organization and building organizational capabilities

How does the company's approach to staffing the organization and building organizational capabilities support its strategy? Does its approach to decision making support good strategy execution? Why or why not?

  Classify the specific reasons for these criticisms

Critics of CRAs assert which they are too intrusive, ineffective also unnecessary also which they can cause as many problems as they solve. Classify the specific reasons for these criticisms.

  Evaluate the strategy that led to the merger

For the corporation that has acquired another company, merged with another company, or been acquired by another company, evaluate the strategy that led to the merger or acquisition to determine whether or not this merger or acquisition was a wi..

  Amount of time needed for the doctor

A hospital is interested in what types of patients make use of their emergency room facilities. It is decided to sample 10% of all patients arriving at the emergency room for the next month and record their demographic information along with type ..

  Explain what are the potential cost advantages of mergers

Explain what are the potential cost advantages of these mergers and Explain and Is a $300 billion national bank likely to be more efficient than a $30 billion regional bank or a $3 billion state-based bank? What

  Prioritizing and information management

Prepare a response to the questions Mr. Petersen asks in the form of an e-mail message. Send the message to your instructor's e-mail address

  Reporting practices and ethics paper

Find two or three articles that address financial reporting practices and ethical standards in health care finance, including Generally accepted accounting principles and Corporate compliance, ethics, or fraud and abuse.

  What does fomc stand for

What does FOMC stand for? What does it do as far as monetary policy? How is the FOMC formed?

  Calculate the depreciation expense

You are given the following information for Gandolfino Pizza Co.: sales = $50,000; costs = $22,500; addition to retained earnings = $6,700; dividends paid = $2,400; interest expense = $4,900; tax rate = 35 percent. Calculate the depreciation expense.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd