Question

Richard placed an order for 1,000 shares in each of three IPOs at $28 a share. He was allocated 1,000 shares of IPO A, 200 shares of IPO B, and 600 shares of IPO C. On the first day of trading, IPO A opened at $28 a share and ended the day at $24.25 a share. IPO B opened at $30 a share and finished the day at $37 a share. IPO C opened at $28 a share and ended the day at $27.65 a share. What is the total profit or loss on these three IPO purchases as of the end of the first day of trading?

− $2,160

− $1,850

− $1,950

$2,240

$2,175

Answer 1

Total Purchase Price on these 3 IPO = (1000 +200 +600) * $28 = $50,400

Day end value of IPO A Purchase = 1000 * $24.25 = $24,250

Day end value of IPO B Purchase = 200 * $37 = $7400

Day end value of IPO C Purchase = 600 * $27.65 = $16,590

Total Day end value on these 3 IPO Purchases= $24,250 + $7400 + $16,590 = $48,240

total profit or loss on these three IPO purchases as of the end of the first day of trading= $48,240 - $50,400 = -$2,160

There is total loss of $2,160 on these three IPO purchases as of the end of the first day of trading