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
-
Suitable Grade Level
University Level - Finance or Economics
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