The BangBang Drum Company recently raised several million dollars in an initial public offering. BangBang received $22 per share from the underwriter, the offering price was $25 per share, and the market price rose to $28 on the first day of trading. The initial return investors earned on the stock was _______.

Question

Quizplus · Accepted Answer

The initial return investors earned on the stock is calculated as follows:Initial return = (Market price - Offering price) / Offering price= ($28 - $25) / $25= 0.12= 12%

The BangBang Drum Company Recently Raised Several Million Dollars in an Initial