Trade Allocation allocation, available, expressed, receive, accounts

svgleeson

Pro rata allocation on the basis of an advance indication of interest means each account for which the shares are suitable:

A) and which has expressed an advance indication of interest, shall receive m/n shares, where there are m shares available and indications of interest for n shares.
B) shall receive m/n shares, where there are m shares available and n such accounts.
C) and which has expressed an advance indication of interest, shall receive w*m shares, where w is the account's proportional value of all such accounts and there are m shares available.

Your answer: B was incorrect. The correct answer was A) and which has expressed an advance indication of interest, shall receive m/n shares, where there are m shares available and indications of interest for n shares.

Pro rata allocation on the basis of an advance indication of interest means that all accounts that have expressed an interest in the issue shall receive m/n shares, where there are m shares available and indications of interest for n shares.

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This just seems wrong to me, both my original answer and the suggested answer.
Shouldn't be the formula something like individual indication of interest/SUM(all indications of interests from suitable account) * available shares to firm ?

What am I missing here?

giorgio10

I think it is:

m ... available shares to firm
n ... all indications of interests

m/n will be pct not number of shares, you are one step ahead with your calculation

ayodayo

A is right... check out Schweser Q bank Question # 86560 for a similar one ..