Two IPOs will commence trading next week.Scott places an order to buy 300 shares of IPO A.Steve places an order to purchase 300 shares of IPO A and 300 shares of IPO B.Both IPOs are priced at $20 a share.Scott is allocated 100 shares of IPO A.Steve is allocated 100 shares of IPO A and 300 shares of IPO B.At the end of the first day of trading,IPO A is selling for $22.70 a share and IPO B is selling for $18.60 a share.What is the difference in the total profits or losses that Scott and Steve have as of the end of the first day of trading?

Question

Quizplus · Accepted Answer

Scott's profit = 100 × ($22.70 - $20) = $270Steve's profit = [100 × ($22.70 - $20)] + [300 × ($18.60 - $20)] = -$150Difference = $270 - (-$150) = $420

Two IPOs Will Commence Trading Next Week