Question

Solve the Problems in its Entirety Only

Question 2 - IPO Underwriter Spreads and Money Left on the Table Below is a table with data for three companies that conducted and IPO. All of these IPOs were firm commitment IPOs underwritten by the same underwriter. Offer Price Per First Closing Market Price Per #Shares offered in Underwriter Firm Share (in $) Share (in $) $mo) Spread (in %) $38.00 $95.06 7.0% $33.00 $34.19 478 2.0% $15.00 $23.43 58 5.0% 23 A) For each of the three companies, calculate the $-amount (in $mo) of fees and discounts that the underwriter charged for the IPO. B) For each of the three companies, calculate how much money was left on the table (in $mo) in their IPOs.

Answer 1

Table 1:answer to A

first closing MIT Poice por sharr spread 6 6 Discount feel offer price 95.00 38 57.06 61-18 1312.38 568.82 315.48 33 1.19 34 488.94 8.43 23.63 43.5 offer price shares offered I bare foods fee 38 23 874 | (61-18) 1 812.82 478 W 15774 (315-48) 15458.52 870 (43.5) 826.5 - Discount fee - Money lef - schare funds Spread & shares offered =874-61-18=812.82 = 57.06 x 23 - 1312038 = 15774-315.48 = 1545852 = 1.19 X 478 = 568-82 = 870 - 43.5 = 826.5 = 8.43 x 58 = 488.94 spreald = offer poice - Market price fee offer price x share offered * % wderwriter spread.

Table 2:answer to Be

Notes: a, b, c, d