You are a broker and have been instructed to place an order for a client to purc

Question

You are a broker and have been instructed to place an order for a client to purchase 100 shares of every IPO that comes to market. The next two IPOs are each priced at $30 a share and will begin trading on the same day. The client is allocated 30 shares of IPO A and 100 shares of IPO B. At the end of the first day of trading, IPO A was selling for $50 a share and IPO B was selling for $26 a share. What is the client's total profit or loss on these two IPOs as of the end of the first day of trading?

Explanation / Answer

Hi,

Please find the answer as follows:

Gain/Loss on IPO A = 30*50 - 30*30 = 600

Gain/Loss on IPO B = 100*26 - 100*30 = -400

The total amoun of gain would be $200 (600 - 400)

Answer is $200.

Thanks.

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