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Margoles Publishing recently completed its IPO. The stock was offered at $14.00 per share. On the first day of trading, the stock closed at $19.00 per share.a. What was the initial return on Margoles?b. Who benefited from this underpricing? Who lost, and why?a. What was the initial return on Margoles?The initial return was 1%. (Round to one decimal place.)b. Who benefited from this underpricing? (Select the best choice below.)OA. Owners of other shares outstanding (not part of the IPO) and underwriters.O B. The company and underwriters.O C. Investors who bought shares at the IPO price of $14.00/share and investment banks (indirectly from future business)O D. The company and owners of other shares outstanding (not part of the IPO).Who lost? (Select the best choice below.)0 A. Owners of other shares outstanding (part of the IPO)O B. Owners of other shares outstanding (not part of the IPO)O C. Both of the above.0 D. Investors who bought shares at the IPO price of $14.00/share and investment banks (indirectly from future business)

Question
Margoles Publishing recently completed its IPO. The stock was offered at $14.00 per share. On the first day of trading, the stock closed at $19.00 per share.
a. What was the initial return on Margoles?
b. Who benefited from this underpricing? Who lost, and why?
a. What was the initial return on Margoles?
The initial return was 1%. (Round to one decimal place.)
b. Who benefited from this underpricing? (Select the best choice below.)
OA. Owners of other shares outstanding (not part of the IPO) and underwriters.
O B. The company and underwriters.
O C. Investors who bought shares at the IPO price of $14.00/share and investment banks (indirectly from future business)
O D. The company and owners of other shares outstanding (not part of the IPO).
Who lost? (Select the best choice below.)
0 A. Owners of other shares outstanding (part of the IPO)
O B. Owners of other shares outstanding (not part of the IPO)
O C. Both of the above.
0 D. Investors who bought shares at the IPO price of $14.00/share and investment banks (indirectly from future business)
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Margoles Publishing recently completed its IPO. The stock was offered at $14.00 per share. On the first day of trading, the stock closed at $19.00 per share. a. What was the initial return on Margoles? b. Who benefited from this underpricing? Who lost, and why? a. What was the initial return on Margoles? The initial return was 1%. (Round to one decimal place.) b. Who benefited from this underpricing? (Select the best choice below.) OA. Owners of other shares outstanding (not part of the IPO) and underwriters. O B. The company and underwriters. O C. Investors who bought shares at the IPO price of $14.00/share and investment banks (indirectly from future business) O D. The company and owners of other shares outstanding (not part of the IPO). Who lost? (Select the best choice below.) 0 A. Owners of other shares outstanding (part of the IPO) O B. Owners of other shares outstanding (not part of the IPO) O C. Both of the above. 0 D. Investors who bought shares at the IPO price of $14.00/share and investment banks (indirectly from future business)

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Step 1

All share prices used in the solution have been expressed in $ / share.

IPO Price, P0 = 14, Closing price on day 1, P1 = 19

Part a: The initial return =&...

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