Margoles recently publishing completed its IPO. The stock was
offered at $ 14.00 per share. On the first day of trading, the
stock closed at $19.00 per share.
a. What was the initial return on Margoles?
b. Who benefited from this underpricing? Who lost, and
why?
a. What was the initial return on Margoles?
The initial return was______ %. (Round to one decimal
place.)
b. Who benefited from this underpricing? (Select the best
choice below.)
AInvestors who bought shares at the IPO price of $14.00/share
and investment banks (indirectly from future business).
B. The company and underwriters.
C.Owners of other shares outstanding (not part of the IPO) and
underwriters.
D.The company and owners of other shares outstanding (not part
of the IPO).
Who lost? (Select the best choice below.)
A.Owners of other shares outstanding (part of the IPO).
B.Owners of other shares outstanding (not part of the
IPO).
C.Both of the above.
D.Investors who bought shares at the IPO price of$14.00/share
and investment banks (indirectly from future business).
Why? (Select the best choice below.)
The original shareholders who participated in the IPO sold
shares at what the market was willing to pay.
The original shareholders who participated in the IPO sold
shares below what the market was willing to pay.
The original shareholders who participated in the IPO sold
shares above what the market was willing to pay.
None of the above.