Jackson Corporation has planned Initial Public Offering Issue of 200,000,000 Ordinary shares which has par value of PKR 10/- each. The entire Issue of 200,000,000 Ordinary Shares will be offered through Book Building procedure at a Floor Price of PKR 50/- per share. Initially, 75% of the Issue i.e. 150,000,000 Ordinary Shares will be allotted to Institutions & HNWI. Remaining 25% of the Issue i.e. 50,000,000 Ordinary Shares will be offered to General Public. Required: (a) After few weeks of successful listing with ample liquidity, Mr. Shack - HNWI has decided to sell 200,000 shares which he received through IPO of Jackson Corporation. What will be the minimum price at which Mr. Shack can liquidate this stock next day if the last day closing price of this stock is PKR 48.80/share? What will be the maximum loss if he executes complete order the same day? (Assume floor price was the strike price). (b) Ms. Bella – HNWI who also decided to sell 100,000 shares which she received through IPO of Jackson Corporation. Bella can bear loss of PKR 150,000/- only. Based on her loss appetite level which strategy will be best suitable for her if the last day closing price of this stock is PKR 48.80/share. (Assume floor price was the strike price).
Jackson Corporation has planned Initial Public Offering Issue of 200,000,000 Ordinary shares which has par value of PKR 10/- each. The entire Issue of 200,000,000 Ordinary Shares will be offered through Book Building procedure at a Floor Price of PKR 50/- per share. Initially, 75% of the Issue i.e. 150,000,000 Ordinary Shares will be allotted to Institutions & HNWI. Remaining 25% of the Issue i.e.
50,000,000 Ordinary Shares will be offered to General Public.
Required:
(a) After few weeks of successful listing with ample liquidity, Mr. Shack - HNWI has decided to sell 200,000 shares which he received through IPO of Jackson Corporation. What will be the minimum price at which Mr. Shack can liquidate this stock next day if the last day closing price of this stock is PKR 48.80/share? What will be the maximum loss if he executes complete order the same day? (Assume floor price was the strike price).
(b) Ms. Bella – HNWI who also decided to sell 100,000 shares which she received through IPO of Jackson Corporation. Bella can bear loss of PKR 150,000/- only. Based on her loss appetite level which strategy will be best suitable for her if the last day closing price of this stock is PKR
48.80/share. (Assume floor price was the strike price).
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