a. To calculate the percentage underpricing, we use the following formula:

$\text{Percentage Underpricing} = \left( \frac{\text{First Day Closing Price} - \text{IPO Price}}{\text{IPO Price}} \right) \times 100$

Where:

• First Day Closing Price = $16.91
• IPO Price = $14.91

Now, applying the values:

$\text{Percentage Underpricing} = \left( \frac{16.91 - 14.91}{14.91} \right) \times 100$

Let me calculate this.The percentage underpricing is approximately 13.4%.

b. Now, let's calculate how much money the firm missed out on due to the underpricing. This is given by the difference between the actual market value after the first day of trading and the initial IPO value, multiplied by the number of shares:

$\text{Missed Money} = (\text{First Day Closing Price} - \text{IPO Price}) \times \text{Number of Shares}$

Where:

• First Day Closing Price = $16.91
• IPO Price = $14.91
• Number of Shares = 10.6 million

Let me calculate this for you.The firm missed out on $21.2 million due to the underpricing.

Would you like any more details or clarifications?

Here are 5 related questions you might find useful:

1. What factors contribute to underpricing in IPOs?
2. How does underpricing benefit initial investors?
3. What is the average underpricing percentage in the stock market?
4. How can firms reduce the risk of underpricing during an IPO?
5. How does underpricing affect the long-term performance of a stock?

Tip: IPO underpricing often occurs due to uncertainty and risk perceived by investors, but it can also be a strategic move to create demand and positive market buzz.