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What is an IPO?
What is an IPO?
- A private offering where shares of a company are sold to retail investors only
- A public offering where shares of a company are sold to private investors
- A public offering where shares of a company are sold to institutional and retail investors (correct)
- A private offering where shares of a company are sold to institutional investors only
What is the purpose of an IPO?
What is the purpose of an IPO?
- To raise new equity capital, monetize private shareholders' investments, and restrict trading of existing holdings
- To raise new equity capital, monetize private shareholders' investments, and enable easy trading of existing holdings (correct)
- To raise new equity capital, restrict private shareholders' investments, and enable easy trading of existing holdings
- To raise debt capital, monetize public shareholders' investments, and enable easy trading of existing holdings
Who typically underwrites an IPO?
Who typically underwrites an IPO?
- Stock exchanges
- Investment banks (correct)
- Private equity investors
- Retail investors
What happens to shares after an IPO?
What happens to shares after an IPO?
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What is the free float in an IPO context?
What is the free float in an IPO context?
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Study Notes
Initial Public Offering (IPO)
- An IPO is the first sale of stock by a company to the public, allowing it to raise capital and become a publicly traded entity.
Purpose of an IPO
- The primary purpose of an IPO is for a company to raise capital to fund business expansion, repay debts, or invest in new projects.
Underwriters of an IPO
- Investment banks and financial institutions typically underwrite an IPO, playing a crucial role in determining the offering price, managing the sale, and promoting the issue to investors.
What happens to shares after an IPO
- After an IPO, shares are listed on a stock exchange, allowing the public to buy and sell them, and the company's shares become liquid and tradable.
- The company's shares are then subject to market forces, with their value fluctuating based on various market and economic factors.
Free Float in an IPO Context
- The free float in an IPO context refers to the proportion of shares that are publicly available for trading, excluding shares held by promoters, directors, and other insiders.
- The free float is an important indicator of a company's liquidity and market capitalization.
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Description
Test your knowledge of Initial Public Offerings (IPOs) and stock launches with this quiz. Learn about the process, underwriting, and listing of shares on stock exchanges.
