Suppose That a Private Firm Wants to Go Public to Give

question 13

Multiple Choice

Suppose that a private firm wants to go public to give the owners a chance to retire.It follows the lead of the Google IPO by using a modified Vickrey (or uniform price) auction.The owners of the firm plans to sell 1 million shares and hope to raise at least $10 million from the auction.The following bids were submitted. Bob 250,000 shares at $12
Sam 350,000 shares at $13
Mary 300,000 shares at $9
Sue 100,000 shares at $10
Ravi 450,000 shares at $11

• A)The market clearing price is $13,and the sellers of the firm get $13 million.
• B)The market clearing price is $12,and the sellers of the firm get $13 million.
• C)The market clearing price is $11,and the sellers of the firm get $11 million.
• D)The market clearing price is $10,and the sellers of the firm get $10 million.
• E)The market clearing price is $9,and the sellers of the firm get$9 million

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Definitions:

Pricing Obstacles

Challenges or factors that prevent a company from setting prices at the desired level or according to its strategic objectives.

Supply Chain

The entire system comprising people, organizations, resources, processes, and technology responsible for bringing a product from its raw material state, through manufacturing, to its final delivery to the consumer.

Demand Forecasts

are predictions about future consumer demand for products or services, based on historical data, market trends, and analysis, used for planning purposes.

Consumer Demand

Consumer demand refers to the desire and ability of purchasers to acquire goods or services at a given price.