Having heard about IPO underpricing, I put in an order to my broker for 1,000 shares of every IPO he can get for me. After 3 months, my investment record is as follows:
a. What is the average underpricing of this sample of IPOs? (Do not round intermediate calculations. Enter your answer as a whole percent.)
b. What is the average initial return on my portfolio of shares purchased from the four IPOs I bid on? Calculate the average initial return, weighted by the amount of money invested in each issue. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
c. "You have just encountered the problem of the winners' curse." True or false?
True
False
