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1. Fair treatment of clients requires that IPO shares are distributed on a pro rata basis-the number of shares allocated to the investment manager are allocated to appropriate client portfolios in proportion to the size of the client's portfolio. Client portfolios are deemed appropriate if the IPO fits the risk-return and other investment characteristics specified in each client's investment policy statement.
An alternative allocation could be equal distribution. The following questions allow you to think about the ethical issues in allocating IPOs to client accounts Suppose a manager is allocated 4,000 shares of an IPO offered at $20 a share but closes at $25 a share on the first day of trading. The manager identifies three client accounts that are appropriate for the IPO allocation. These accounts are in the amount of $1 million, $5 million, and $10 million. The manager plans to take whatever amount is needed out of the account to provide the client with the IPO allocation at the IPO offer price. Assume that all of the assets remaining in all three accounts earn 10 percent. Calculate the return to each account depending on whether the shares are allocated equally or on a pro rata basis. Which method do you think is most equitable, and why?
If immediately opon issue, interest rates increased to 9%, what would be the value of the zero coupon rate bond?
describe the general findings from capital market research concerning the information content of accounting numbers and
Discuss and explain the situations under which financial leverage is beneficial vs. when it is harmful. Is there a point at which it is beneficial from some stakeholders' point of view but not beneficial from other stakeholders view point?
(a) For vB1 = vB2 = VCM = 0 V, find VE, VC1, and VC2. (b) Find the input common-mode range. (c) If vB2 =0, find the value of vB1 that increases the current in Q1: by 10%.
Research what happened later. How did ONE's stock price perform in the mid 1990s. How would you interpret the stock-price movements in term of success of failure of its risk-management strategy?
Nacho Libre S.A. has 10,000,000 common shares outstanding that trade for $30.00 per share. The company has also issued one bond with a par value of $60,000,000 that currently trades at 105 percent of par.
What is the volatility (standard deviation) of a portfolio that consists of an equal investment in 20 firms of (a) type S, and (b) type I?
Prepare journal entries to record the transactions described above. Prepare the December 31, 2011, stockholders' equity section. Assume 2011 net income was $330,000
your factory has been offered a contract to produce a part for a new printer. the contract would last for three years
the gilbert instrument corporation is considering replacing the wood steamer it currently uses to share guitar sides.
Suppose that the risk free rate of interest is 3 percent and the expected rate of return on the market is 9 percent. A share of stock is selling for $55 at the beginning of the year.
There is a 60 percent probability that long-term interest rates one year from today will be 13 percent, and a 40 percent probability that they will be 9 percent. Assume that if interest rates fall the bonds will be called. What coupon rate should ..
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