Question

Question #2 (10 Marks) Roundtree Software is going public using an Auction IPO. The firm has received the following bids: Bidder A B C D E F G Quantity 100,000 shares 200,000 shares 500,000 shares 8 00,000 shares 1,200,000 shares 800,000 shares 750,000 shares $ $ $ $ $ $ S Price 50 50 49 46 46 45 42 A. If the firm is intending to sell 500,000 shares, what will be the price per share? Activa DELL ? " ", 510F 2. Preso Insert Day R TYY!

Answer 1

Firstly lets compute the cumulative number of shares demanded at or above any given price

Bidder	Quantity	Price	Cumulative Shares
A	100000	50	100000
B	200000	50	300000
C	500000	49	800000
D	800000	46	1600000
E	1200000	46	2800000
F	800000	45	3600000
G	750000	42	4350000

So the share price per share would be $49/share because investors have placed orders for a total of 5,00,000 shares at a price of $49 or higher.

I hope this clear your doubt.

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