Question

You have been instructed to place an order for a client to purchase 500 shares of every IPO that comes to market. The next two IPOs are each priced at $26 a share and will begin trading on the same day. The client is allocated 500 shares of IPO A and 240 shares of IPO B. At the end of the first day of trading, IPO A was selling for $23.90 a share and IPO B was selling for $29.40 a share. What is the client's total profit or loss on these two IPOs as of the end of the first day of trading

Answer 1

Answer:

At the end ofthe day it loss 504

Explanation:

First, we will compare the IPO value with the market price to check the result per share

IPO A             26

market value 23.90

loss per share 2.1

IPO B             26

market value 29.4

gain per share 3.4

Then, we multiply by the amount of shares for each IPO

shares of IPO A 500

loss for IPO A 500x 2.1 = 1,050

shares of IPO B 240

gain for IPO B 240 x 2.1 = 504

Last, we put the values together and get the net for the transaction

IPO A (1,050)

IPO B    504

total     (546)