The Bert Corp. and Ernie, Inc., have both announced IPOs. You place an order for 1,150 shares of each IPO. One of the IPOs is underpriced by $18.00 and the other is overpriced by $6.50. You will receive all of the shares you ordered of the overpriced IPO, but only one-half of the shares you ordered of the underpriced IPO. What profit do you expect? a. $31,875.00.
b. $11,562.50.
c. $14,375.00.
d. $7,552.00.
e. $2,812.50.

The Bert Corp. and Ernie, Inc.

The profit expected is:

= $2,875.

Explanation:

a) Data and Calculations:

                           The Bert Corp.    Ernie, Inc.

IPO order placed  1,150 shares      1,150 shares

Underpriced by       $18.00

Overpriced by                                   $6.50

Profited expected    $10,350          -$7,475

Net profit = $2,875 ($10,350 - $7,475)

b) The profit expected is generated from the underpriced stock.  This profit is reduced by the increased cost incurred on the over-priced stock.  Therefore, the net profit is the difference between the profit and the additional cost incurred.

answer; ///(d); determining who competes most closely   with whom evaluating whether industry driving forces and competitive pressure favor some strategic groups and hurt others, and ascertaining whether the profit potential of different strategic groups varies due to the strengths and weaknesses in each groups respective market positions;

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