Isaac placed an order with his broker to purchase 300 shares of each of three IPOs that are being released this month.Each IPO has an offer price of $24 a share.He received allocations of 300 shares of A,25 shares of B,and 250 shares of C.On their respective first days of trading Stock A closed at $20 a share,Stock B closed at $29 a share,and Stock C closed at $25 a share.How much less did he earn on his combined first day of trading than he would have had he received his full allocation of shares for all three stocks?

Question

Quizplus · Accepted Answer

Actual profit = 300($20 - $24)+ 25($29 - $24)+ 250($25 - $24)= -$825
Full-allocation profit = 300($20 - $24)+ 300(29 - $24)+ 300($25 - $24)= $600
Difference = -$825 - $600 = -$1,425

Isaac Placed an Order with His Broker to Purchase 300