Math Problem Statement

Initial Public Offering. Upper A biotechnology company​, Keros Therapeutics​, completed its IPO on April​ 8, 2020​, and listed on the Nasdaq. Keros sold 6 comma 000 comma 000 shares of stock to primary market investors at an IPO offer price of $ 15.79​, with an underwriting discount of 6.1​%. Secondary market​ investors, however, were paying ​$21.68 per share for Keros​' 19 comma 189 comma 391 shares of stock outstanding ​(which includes the​ newly-issued ​shares). a. Calculate the total proceeds for Keros​' IPO. b. Calculate the dollar amount of the underwriting fee for Keros​' IPO. c. Calculate the net proceeds for Keros​' IPO. d. Calculate market capitalization for Keros​' outstanding stock. e. Calculate IPO underpricing for Keros​' IPO. f. Explain the IPO underpricing for Keros. Question content area bottom Part 1 a. The total proceeds for Keros​' IPO is ​$    enter your response here. ​(Round to the nearest​ dollar.) Part 2 b. The dollar amount of the underwriting fee for Keros​' IPO is ​$    enter your response here. ​(Round to the nearest​ dollar.) Part 3 c. The net proceeds for Keros​' IPO is ​$    enter your response here. ​(Round to the nearest​ dollar.) Part 4 d. Keros​' market capitalization is ​$    enter your response here. ​(Round to the nearest​ dollar.) Part 5 e. Keros​' IPO underpricing is    enter your response here​%. ​(Round to two decimal​ places.) Part 6 f. Explain the IPO underpricing for Keros. ​"Positive underpricing indicates that​ secondary-market investors were willing to pay more for the​ company's shares than the IPO offer price that the shares were sold for in the primary​ market." This statement is True .​ (Select the best answer from the​ drop-down menu.)

Solution

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Math Problem Analysis

Mathematical Concepts

Financial Mathematics
Percentage Calculations
Market Capitalization
Underpricing in IPOs

Formulas

Total Proceeds = Number of Shares × IPO Offer Price
Underwriting Fee = Total Proceeds × Underwriting Discount
Net Proceeds = Total Proceeds - Underwriting Fee
Market Capitalization = Outstanding Shares × Secondary Market Price
IPO Underpricing = (Secondary Market Price - IPO Offer Price) / IPO Offer Price × 100

Theorems

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Suitable Grade Level

University Level - Finance or Economics