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16 November, 09:38

Rita placed an order for 300 shares of each of four separate IPOs (Orders A, B, C, and D) with an offer price of $16 each. She received 100 shares of Order B, 200 shares of Order D, and 300 shares of the other orders. At the end of the first day, Order A was overpriced by $2 a share, Order B was underpriced by $4 a share, Order C was correctly priced, and Order D was overpriced by $1 a share. What was combined total profit or loss for the first day on these four orders

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  1. 16 November, 12:41
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    Complete question:

    Rita placed an order for 300 shares of each of four separate IPOs (Orders A, B, C, and D) with an offer price of $16 each. She received 100 shares of Order B, 200 shares of Order D, and 300 shares of the other orders. At the end of the first day, Order A was overpriced by $2 a share, Order B was underpriced by $4 a share, Order C was correctly priced, and Order D was overpriced by $1 a share. What was combined total profit or loss for the first day on these four orders

    Multiple Choice

     -$400  $400  $100  -$100  -$300

    Answer:

    $400 was combined total profit or loss for the first day on these four orders

    Solution:

    Given,

    Rita placed an order for 300 shares of each of four separate

    Offer price of $16 each

    She received 100 shares of Order B, 200 shares of Order D, and 300 shares of the other orders.

    Now,

    Order No. of shares Profit / (loss) per share Net profit / (loss)

    A 300 $ (2) $ (600)

    B 100 $ 4 $ 400

    C 300 $ - $ -

    D 200 $ (1) $ (200)

    Net profit / (loss) $ (400)

    Net loss for first day is $400.
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