Appendix: Suppose that a private firm wants to go public to give ...

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Appendix: 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 get9 million

Question 2

The more bidders there are at an oral auction,
 a. the higher the expected selling price
  b. the higher each bidder bids
  c. the longer that each bidder will continue to bid
  d. the less each bidder will shade his bid

[aidanmbrowne]

Answer to Question 1

c

Answer to Question 2

a

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Gracias!

[hramirez205]

Excellent