Two IPOs will commence trading next week. Scott places an order to buy 300 share
ID: 2704286 • Letter: T
Question
Two IPOs will commence trading next week. Scott places an order to buy 300 shares of IPO A. Steve places an order to purchase 300 shares of IPO A and 300 shares of IPO B. Both IPOs are priced at $20 a share. Scott is allocated 100 shares of IPO A. Steve is allocated 100 shares of IPO A and 300 shares of IPO B. At the end of the first day of trading, IPO A is selling for $22.70 a share and IPO B is selling for $18.60 a share. What is the difference in the total profits or losses that Scott and Steve have as of the end of the first day of trading?Explanation / Answer
Hi,
Please find the answer as follows:
Scott's Profit = 100*(22.70 - 20) = 270
Steve's Profit = 100*(22.70 - 20) + 300*(18.60 - 20) = -150
Difference in Total Profits = 270 - (-150) = 420
Answer is 420
Notes:
Profit/Loss At the End of the Day = Number of Shares Alloted*(Closing Price - Purchase/Alloted Price)
Thanks.
Related Questions
Hire Me For All Your Tutoring Needs
Integrity-first tutoring: clear explanations, guidance, and feedback.
Drop an Email at
drjack9650@gmail.com
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.