Why is underpricing not a great concern with bond offerings? Use the following information in answering the
Question:
Why is underpricing not a great concern with bond offerings?
Use the following information in answering the next three questions: Netscape Communications, maker of Internet and World Wide Web software, went public in August of 1995. Assisted by the investment bank of Morgan Stanley, Netscape sold five million shares at $28 each, thereby raising a total of $140 million. At the end of the first day of trading, the stock sold for $58.25 per share, down from a high of $71 reached earlier in the day in frenzied trading. Based on the end-of day numbers, Netscape’s shares were apparently underpriced by about $30 each, meaning that the company missed out on an additional $150 million.
Step by Step Answer:
Fundamentals Of Corporate Finance
ISBN: 9780072553079
6th Edition
Authors: Stephen A. Ross, Randolph Westerfield, Bradford D. Jordan