What is an Initial Public Offering (IPO)? How does it differ from a Seasoned Equity offering (SEO)?
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Question:
What is an Initial Public Offering (IPO)? How does it differ from a Seasoned Equity offering (SEO)?
2. Say, you are interested in an IPO. How can you invest in an IPO?
3. Explain the advantages and disadvantages of going public.
4. What are the direct costs of an IPO to the company? Obtain your answer both in dollars and percentages.
a. The underwriting discounts and commissions per share represent the direct costs per share to the company in dollars.
b. You can calculate the underwriting discounts and commissions in percentages as follows: Underwriting discounts and commissions per share
divided by Public offering price.
Per Share | Total | |||||||
Initial public offering price | $ | 4.50 | $ | 11,025,000 | ||||
Underwriting discount (1) | $ | 0.36 | $ | 882,000 | ||||
Proceeds, before expenses, to us (2) | $ | 4.14 | $ | 10,143,000 |
Related Book For
Fundamentals of Financial Management
ISBN: 978-1285867977
14th edition
Authors: Eugene F. Brigham, Joel F. Houston
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