Question

Kim placed an order with her broker for 550 shares of each of three IPOs being offered this week. Each of the IPOs has an offer price of $30. The number of shares allocated to Kim along with the closing prices on the first trading day are:

Stock Shares Allocated Price
A 550 $29.15
B 400 33.43
C 360 35.87
What is Kim's total profit on these three stocks at the end of the first day of trading?


Multiple Choice

$4,647.50


$3,832.60


$3,017.70


$1,645.70


$3,448.80

Answer 1

To calculate Kim's total profit at the end of the first day of trading for the three IPOs, we need to find out how much she made or lost on each stock. We can calculate the profit for each stock using the formula:

\[
\text{Profit} = (\text{Closing Price} - \text{Offer Price}) \times \text{Shares Allocated}
\]

Where the offer price is $30 for all three stocks.

Let's calculate the profit for each stock:

1. **Stock A**:
- Shares Allocated: 550
- Closing Price: $29.15
- Profit: \((29.15 - 30) \times 550 = (-0.85) \times 550 = -467.50\)

2. **Stock B**:
- Shares Allocated: 400
- Closing Price: $33.43
- Profit: \((33.43 - 30) \times 400 = 3.43 \times 400 = 1,372.00\)

3. **Stock C**:
- Shares Allocated: 360
- Closing Price: $35.87
- Profit: \((35.87 - 30) \times 360 = 5.87 \times 360 = 2,111.20\)

Now, we will sum the profits from all three stocks:

Total Profit:
\[
\text{Total Profit} = \text{Profit A} + \text{Profit B} + \text{Profit C
}\]
\[
\text{Total Profit} = (-467.50) + 1,372.00 + 2,111.20 = 3,015.70
\]

After calculating the profits correctly, we find that Kim's total profit at the end of the first day of trading is:

\[
\text{Total Profit} = 3,015.70
\]

However, it looks like none of the answer choices reflect this exact total. Given the closest to this calculated value is **$3,017.70**, we can conclude that this is most likely the intended answer.

Thus, the answer is:

**$3,017.70**