Question

The peter corporation and the sellers company have both announced ipos. you place an order for 1,350 shares of each ipo. one of the ipos is underpriced by $16.00 and the other is overpriced by $8.75. if you could get all of the shares you ordered for each ipo, what would your profit be? multiple choice

O $8,156.25
O $9,787.50
O $21,600.00
O $33,412.50
O $8,971.75

Answer 1

The profit from the purchase of 1,350 shares of an underpriced IPO and an overpriced IPO will be $33,412.50.

Step-by-step explanation:

To calculate the profit, we need to consider the difference in the purchase and selling prices of each IPO. Let's calculate the profit for each IPO:

Profit from underpriced IPO (Peter Corporation):

Total shares ordered: 1,350

Underpricing: $16.00

(1,350 shares) x ($16.00 underpricing) = $21,600.00

Profit from overpriced IPO (Sellers Company):

Total shares ordered: 1,350

Overpricing: $8.75

(1,350 shares) x ($8.75 overpricing) = $11,812.50

To calculate the total profit, we add the profits from both IPOs:

$21,600.00 + $11,812.50 = $33,412.50.

Therefore, your profit would be $33,412.50.