Finance Sample Assignment (PDF)

Running head: FINANCE
Finance
Name of the Student:
Name of the University:
Authors Note:

FINANCE
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Table of Contents
Question:....................................................................................................................................2
1. Stating the calculations of descriptive analysis for initial returns and interpret the
Australian IPO market:..............................................................................................................2
2. Calculating HPR of percentage return on the long run IPO performance:..........................11
3. Analysing different theories and empirical study for identifying the occurrence of short run
IPO under-pricing in US and Australia:...................................................................................12
Reference and Bibliography:....................................................................................................15

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Question:
1. Stating the calculations of descriptive analysis for initial returns and interpret the
Australian IPO market:
Descriptive Analysis (Initial return):
IPO Return
Mean 9.423%
Standard Error 4.941%
Median 5.778%
Mode 0.000%
Standard Deviation 26.146%
Sample Variance 6.836%
Kurtosis 607.687%
Skewness 144.621%
Range 154.843%
Minimum -55.143%
Maximum 99.700%
Sum 263.856%
Count 28
Descriptive analysis depicted in the above table relatively represents the data of 28
companies, which was listed in April 2015 to July 2015. This evaluation is relatively
conducted to identify the impact of underpricing in IPOs, which allows investors to obtain
abnormal gain during the first day of trading. The above table relatively depicts mean,

FINANCE
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median, and standard deviation of the returns generated on the day of IPO initiation.
Moreover, from the calculation it is detected that the Companies listed in Australian Stock
Exchange provided 9.423% average returns. During this period, the median generated from
the returns fees at the levels of 5.778%, which indicates that 50% of the IPO returns during
the first day was more than 5.778%. Furthermore, from the descriptive analysis the risk
involved in IPO reading is also detected, where the standard deviation is at the levels of
26.146%. This is relatively indicates that the return generation capacity of IPO is higher but
the risk attributes of the investment is also high. This relevant evaluation indicates that
investments in IPOs could eventually allow investors to generate higher rate of return from
investment for a short duration. In addition, the volatility identified in IPOs indicates the
presence of underpricing in the Australian market, which would benefit investors to generate
higher rate of return from Investments. Kotlar et al. (2017) mentioned that investors during
the IPO initiation are able to acquire stocks with low share valuation, which could eventually
help them increase the returns from investment.
1ST
AER
ALI
AYS
CGC
FFT
GDF
GTY
KSL
MUA
NCL
PPL
RFN
SLC
-80.0000%
-40.0000%
0.0000%
40.0000%
80.0000%
120.0000%
Return %
The returns provided by the 28 IPOs in the first day of trading are depicted in the
above figure, where the returns that could allow investors to generate higher income from
investment are effectively identified. However, the evaluation relatively indicates that the
first day trading would only benefit some investors as maximum of the IPS got losses or low