Question Solved1 Answer Q1- what is the underpricing phenomenon? and why it’s caused? Q2- how to calculate the underpricing of an IPO? Q3- how the investment bank can be a market maker? Q4- test the efficient market hypothesis a- choose an event that you think will impact the company stock price due to the effect of new information. b- use a line graph to show the movement of the stock price: before, during and after the event. c- based on your observation does the price impacted by the event. d- is this consistent with EMH? Why , why not? Q5- use a line graph to show the stock price for SABIC and SADAFCO with the market index “5 years” then describe the graph and what is your conclusion. In the conclusion, give your opinion about the correlation and how the company move in comparison to the market index? If they move together why and if they move inconsistently why? Think about the volatility and beta. In addition, is it good to invest in both companies to diversify

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Q1- what is the underpricing phenomenon? and why it’s caused?

Q2- how to calculate the underpricing of an IPO?

Q3- how the investment bank can be a market maker?

Q4- test the efficient market hypothesis a- choose an event that you think will impact the company stock price due to the effect of new information. b- use a line graph to show the movement of the stock price: before, during and after the event. c- based on your observation does the price impacted by the event. d- is this consistent with EMH? Why , why not?

Q5- use a line graph to show the stock price for SABIC and SADAFCO with the market index “5 years” then describe the graph and what is your conclusion. In the conclusion, give your opinion about the correlation and how the company move in comparison to the market index? If they move together why and if they move inconsistently why? Think about the volatility and beta. In addition, is it good to invest in both companies to diversify

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Answering the first question as per the guidelines of Chegg. 1. Underpricing is a common feature in initial public offering as when the initial public offering will be issued to the public then these initial public offering can be priced at a lower valuations and these valuations will be lower than the closing price of first day listing so it is assumed that these initial public offerings were issued at a discount and discount which ... See the full answer