Explore BrainMass

Explore BrainMass

    Stock Portfolio and IPO Underpricing

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    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 March 4, 2021, 6:18 pm ad1c9bdddf


    Solution Summary

    Answers question on IPO Underpricing.