Explore BrainMass

Stock Portfolio and IPO Underpricing

Having heard about IPO underpricing, I put in an order to my broker for 1,000 shares of every IPO he can get me. After 3 months, my investment record is as follows:

IPO Shares Price per
return Allocated to Me Share Initial
A 500 $10 7%
B 200 20 12%
C 1,000 8 -2%

a. What is the average underpricing of this sample of IPOs?

b. What is the average initial return on my "portfolio" of shares purchased from the four IPOs I bid on?

Please see attached file for full question.

© BrainMass Inc. brainmass.com June 21, 2018, 2:36 am ad1c9bdddf


Solution Summary

Answers question on IPO Underpricing.