Richard has an outstanding order with his stock broker to purchase 1,000 shares

Question

Richard has an outstanding order with his stock broker to purchase 1,000 shares of every IPO. The next three IPOs are each priced at $30 a share and will all start trading on the same day. Richard is allocated 1,000 shares of IPO A, 400 shares of IPO B, and 100 shares of IPO C. On the first day of trading IPO A opened at $31.50 a share and ended the day at $26 a share. IPO B opened at $31 a share and finished the day at $32 a share. IPO C opened at $36.50 a share and ended the day at $40.25 a share. What is Richard's total profit or loss on these three IPOs as of the end of the first day of trading?

Explanation / Answer

-$2,175

Total profit = [1,000 x? ($26 - $30)] + [400 x? ($32 - $30)] + [100 ?x ($40.25 - $30)] = -$2,175

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