Question: Please explain the difference between Primary and secondary markets. Define IPO and describe the underwriting process. In which market does the IPO take place? You
Please explain the difference between Primary and secondary markets. Define IPO and describe the underwriting process. In which market does the IPO take place?
You are an Investment Bank that has been courting a Corporate customer for years, and finally it is time for the company to raise capital in the Equity markets.
Answer each question thoroughly. Your grade will depend on your demonstration of your in-depth understanding and explanation of each question regarding the capital markets process.
- Explain, in detail, the process of becoming a public company.
- Describe your Syndicate Desk and Book-Building process.
- What are the risks to the Investment Bank to underwriting the deal? What does the price setting and agreement of a deal imply between the company and the Investment Bank?
- Who receives the proceeds of the IPO, how much did it cost the company to go public if your banking fees charged are: $150,000?
- The underwriting stock price is set at $10 per share, the company is issuing 1 million shares and its first trade on the market is $12.00 per share?
- Who gets the benefit of the difference between the $10.00 established price and the $12.00 market trading price?
- Who regulates the IPO process and the new public company and what responsibilities does management have to now adhere to?
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