Abbott Co. and Baker Co. have both announced IPOs at $24 per share. One of these is undervalued by $3, and the other is overvalued by $1.25, but you have no way of knowing which is which. You plan on buying 1,000 shares of each issue. If an issue is underpriced, it will be rationed, and only half your order will be filled. What profit do you actually expect?
A) $175
B) $250
C) $325
D) $350
E) $425
Correct Answer:
Verified
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