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Homework answers / question archive / Thunder Inc
Thunder Inc. is in the process of selling shares of stock in an auction IPO. At the end of the bidding period, Thunder's investment bank has received the following bids:
|
Price ($) |
Number of Shares Bid |
|
$39.0 |
50,000 |
|
$38.5 |
25,000 |
|
$38.2 |
25,000 |
|
$38.0 |
100,000 |
|
$37.5 |
125,000 |
|
$37.0 |
75,000 |
|
$36.5 |
150,000 |
|
$36.0 |
240,000 |
|
$35.5 |
80,000 |
|
$34.5 |
130,000 |
|
$35.0 |
140,000 |
|
$33.8 |
125,000 |
|
$34.0 |
150,000 |
|
$33.5 |
80,000 |
|
$33.0 |
75,000 |
|
$32.5 |
200,000 |
What will the offer price of these shares be if Thunder is selling 1 million shares?
The correct answer is $ 34.50
Explanation
The company wants to sell 1 million shares. During the IPO bissing process, different investors put their various prices and quantity demanded by them at that price.
Total Shares to be sold = 1000000
We will start from the highest price and count the number of shares upto 1000000.
So at the price of 34.50, the quantity demanded will be 1000000( Starting from price of 39)
So the issue price of shares will be 34.50.
