Question

Rita placed an order for 300 shares of each of four separate IPOs (Orders A, B, C, and D) with an offer price of $16 each. She received 100 shares of Order B, 200 shares of Order D, and 300 shares of the other orders. At the end of the first day, Order A was overpriced by $2 a share, Order B was underpriced by $4 a share, Order C was correctly priced, and Order D was overpriced by $1 a share. What was combined total profit or loss for the first day on these four orders

Answer 1

Complete question:

Rita placed an order for 300 shares of each of four separate IPOs (Orders A, B, C, and D) with an offer price of $16 each. She received 100 shares of Order B, 200 shares of Order D, and 300 shares of the other orders. At the end of the first day, Order A was overpriced by $2 a share, Order B was underpriced by $4 a share, Order C was correctly priced, and Order D was overpriced by $1 a share. What was combined total profit or loss for the first day on these four orders

Multiple Choice

−$400 $400 $100 −$100 −$300

Answer:

$400 was combined total profit or loss for the first day on these four orders

Solution:

Given,

Rita placed an order for 300 shares of each of four separate

Offer price of $16 each

She received 100 shares of Order B, 200 shares of Order D, and 300 shares of the other orders.

Now ,

Order           No. of shares       Profit/ (loss) per share   Net profit/ (loss)

A                           300                          $ (2)                       $ (600)

B                           100                           $ 4                         $ 400

C                           300                          $ -                              $ -

D                           200                          $ (1)                        $ (200)

Net profit/ (loss)                                                                  $ (400)  

Net loss for first day is $400.