A firm conducting an IPO of common stock sold 5 million new shares in the offering at an offer price of $20 per share. A...
A firm conducting an IPO of common stock sold 5 million new shares in the offering at an offer price of $20 per share. After the offering, the firm had 10 million shares outstanding, and the price of those shares in the secondary market was $22. The firm's IPO was underpriced by ________.
A) 10%
B) 90.9%
C) 25%
D) 15.0%
E) 50%
Homework Answers
Answer: Option A is correct
The firm's IPO was under priced by: (Secondary market price- Offer price)/Offer price
=(22-20)/20=0.1 or 10.00%
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A firm conducting an IPO of common stock sold 5 million new shares in the offering at an offer price of $20 per share. A...
A firm conducting an IPO of common stock sold 5 million new shares in the offering...
A firm conducting an IPO of common stock sold 5 million new shares in the offering at an offer price of $20 per share. After the offering, the firm had 10 million shares outstanding, and the price of those shares in the secondary market was $22. The total proceeds from the firm's IPO were ________. A) $300 million B) $50 million C) $110 million D) $440 million E) $100 million
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