IPO Flashcards
1
Q
What is IPO?
A
- Inital public offerings
- process of selling stocks to the public for the first time
2
Q
Advantages of IPO
A
greater liquidity and better access to capital
3
Q
Disadvantages of IPO
A
equity holders become more dispersed -> loss of control
4
Q
Primary and secondary offerings
A
Primary offerings = new shares to raise capital
secondary offerings = already existing shares are sold by current shareholders
5
Q
Best-Effort IPO
A
underwriter tries to sell the shares for best possible price but it is not guaranteed that the stock will be sold
6
Q
Firm Commitment IPO
A
Underwirter guarantees that it will sell all of the stocks at the offer price
underwriter purchases entire issue and resells it at a slightly higher price
7
Q
Auction IPO
A
market determines price by auctioning
