If you were an investment banker, how would you determine the offering price of an IPO?
Answer to relevant QuestionsAre the significantly positive short-run and significantly negative long-run returns earned by IPO shareholders compatible with market efficiency? If not, why not? What materials are presented in an IPO prospectus? In general, what result is documented regarding sales of shares by insiders and venture capitalists? GSM Corporation sold 20 million shares of common stock in a seasoned offering. The market price of the company’s shares immediately before the offering was $14.75. The shares were offered to the public at $14.50, and the ...Why do a firm’s stockholders hold a valuable “default option”? How could this option induce stockholders to employ high levels of financial leverage? How do stock prices generally react to announcements of firms’ changes in leverage? Why is this result perplexing and seemingly contradictory?
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