A firm conducting an IPO of common stock sold 1 million new shares in the offering at an offer price of $10 per share.After the offering,the firm had 5 million shares outstanding,and the price of those shares in the secondary market was $12.The firm's market capitalization is ________.

Question

Quizplus · Accepted Answer

Market capitalization is calculated by multiplying the total number of shares outstanding by the current market price per share. After the IPO, the firm has 5 million shares outstanding, and the market price is $12 per share. Therefore, the market capitalization is 5 million shares * $12/share = $60 million.

A Firm Conducting an IPO of Common Stock Sold 1