What is the average IPO under pricing

Assignment Help Financial Management
Reference no: EM131980599

You have an arrangement with your broker to request 1,000 shares of all available IPOs. Suppose that 10% of the time, the IPO is "very successful" and appreciates by 111% on the first? day, 77% of the time it is "successful" and appreciates by 12%, and 13% of the time it? "fails" and falls by 13%.

a. By what amount does the average IPO appreciate the first day; that is, what is the average IPO underpricing?

The average IPO appreciation the first day is __________%. (Round to one decimal place.)

b. Suppose you expect to receive 65 shares when the IPO is very successful, 220 shares when it is successful, and 1,000 shares when it fails. Assume the average IPO price is $20.

What is your expected one-day return on your IPO investments?

The expected one-day return on the IPO investments is ___________%. (Round to one decimal place.)

Reference no: EM131980599

Questions Cloud

Difference between growth equity fund and income equity fund : What is the difference between a growth equity fund and an income equity fund? What type investor might find each more attractive?
What is the purpose of municipal bonds : What is the purpose of municipal bonds? how much would she have to earn on an equivalent corporate to be equally compensated?
What will its new share price be : Suppose the stock of Host Hotels and Resorts is currently trading for $20 per share. If Host issued a 20% stock dividend, what will its new share price be?
Earn on equivalent corporate to be equally compensated : What is the purpose of municipal bonds? how much would she have to earn on an equivalent corporate to be equally compensated?
What is the average IPO under pricing : By what amount does the average IPO appreciate the first day; that is, what is the average IPO under pricing?
What is the value of milton industries with leverage : What is the value of Milton Industries without leverage? What is the value of Milton Industries with leverage?
Resources to assess proposal for constructing new dam : Imagine that you have been hired by the Maine Department of Natural Resources to assess a proposal for constructing new dam that is expected to last for 50 year
European put option has negative time value : If a one-year European put option has a negative time value, what is the lowest possible strike price it could have?
Hubbard does leveraged recapitalization : Hubbard does a leveraged recapitalization, issuing debt and repurchasing stock, until its debt-equity ratio is 0.53.

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

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