Alicia placed an order with her broker to purchase 500 shares of each of three IPOs that are being released this month.Each IPO has an offer price of $16 a share.The number of shares allocated to Alicia along with the closing stock price at the end of the first day of trading for each stock,are as follows:
What is Alicia's total profit or loss on these three stocks as of the end of the first day of trading for each stock?

Question

Quizplus · Accepted Answer

For each IPO, Alicia purchased 500 shares at an offer price of $16 per share, so the total initial cost for each stock was:

500 x $16 = $8,000

The number of shares allocated to Alicia, along with the closing stock price at the end of the first day of trading for each stock, are as follows:

- Stock 1: Allocated 500 shares, closing price $17 per share
- Stock 2: Allocated 500 shares, closing price $15 per share
- Stock 3: Allocated 500 shares, closing price $19 per share

To calculate Alicia's profit or loss on each stock, we need to subtract the initial cost from the value at the end of the first day:

- Stock 1: (500 x $17) - $8,000 = $1,500 profit
- Stock 2: (500 x $15) - $8,000 = -$500 loss
- Stock 3: (500 x $19) - $8,000 = $1,500 profit

To calculate Alicia's total profit or loss, we add up the profits and losses for each stock:

$1,500 + (-$500) + $1,500 = $1,500

Therefore, Alicia's total profit as of the end of the first day of trading is $1,500, which corresponds to answer choice C.

Alicia Placed an Order with Her Broker to Purchase 500