An initial public offering (IPO) is the first sale of shares in a company to the public. A new issue is a security that has been created and sold for the first time. IPOs are typically underwritten by investment banks, who also help determine the offer price. What are the five types of securities? 1. … Read more
Underpricing an IPO refers to the practice of deliberately setting the initial price of a new stock or security below its true market value in order to generate interest and demand from investors. This technique is often used by investment banks and other financial institutions in order to generate buzz and excitement around a new … Read more
A primary distribution is the initial sale of shares by a company to the public. The company may be newly formed or already publicly traded, but in either case, the primary distribution represents the first time that the company’s shares have been available for purchase by the general public. There are two types of primary … Read more
When a company goes public, it offers shares of stock to the public for the first time. The company raises money by selling shares to investors, and the investors buy shares in the company in hopes that the company will be successful and the value of the shares will go up. When a company goes … Read more
The phrase “best efforts” is commonly used in the securities industry and refers to the level of effort that an underwriter of a securities offering will expend in order to sell the securities. In a best efforts offering, the underwriter agrees to use its best efforts to sell the securities, but does not guarantee that … Read more
A greenshoe option is an option that allows the underwriter of an initial public offering (IPO) to purchase additional shares from the issuer at the same price as the IPO if the demand for the shares is higher than expected. The greenshoe option can be exercised by the underwriter at any time during the life … Read more
An “Offering” refers to the sale of securities by a company in order to raise capital. The securities are typically sold to institutional investors, such as banks, insurance companies, and mutual funds, as well as to wealthy individuals. The company will usually engage an investment bank to act as an underwriter for the offering. The … Read more
A stabilizing bid is an order to buy shares in an IPO that is placed by the investment bank that is underwriting the deal. The purpose of the stabilizing bid is to support the price of the stock after it begins trading, in order to avoid a sharp decline. When a company goes public, it … Read more
The term “flotation” refers to the process of bringing a company onto the stock market. This involves the sale of shares in the company to investors, in order to raise capital for the business. The process of flotation can be a complex and lengthy one, and it is often overseen by investment banks and other … Read more
Devolvement is the process through which a company’s shares are offered to the public for the first time. The company may choose to do this in order to raise capital, to increase its visibility, or to create a market for its shares. The process of devolvement can be complex, and there are a number of … Read more
