Question
In: Finance
Your investment bankers price your IPO at $15.26 per share for 9.5 million shares.
Your investment bankers price your IPO at $15.26 per share
for 9.5 million shares. If the price at the end of the first day of
trading is $17.16 per share,
a. What was the percentage underpricing?
b. How much money did the firm miss out on due to
underpricing?
Solutions
Expert Solution
% underpricing = (Price on Day 1 - Issue Price)/Issue Price
= (17.16 - 15.26)/15.26
= 12.45%
b.Money missed out = (17.16-15.26)*9,500,000
= $18,050,000
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