Problem 6: Miscellaneous topics including IPO filing, IPO ac…

Prоblem 6: Miscellаneоus tоpics including IPO filing, IPO аctivity аnd underpricing, risk-return relation, capital budgeting, and capital structure (19 points) b) The attached figure shows the average first-day return and the number of IPOs in Canada for each year from 1980 to 2024 (IPOs-Canada.pdf). The average first-day return is indicated by the green line (right y-axis), while the number of IPOs is displayed by the blue bars (left y-axis). How did the number of firms going public in Canada evolve over time? How did the underpricing evolve over time? Compared to other countries, are Canadian IPOs, on average, fairly priced? (4 points)