Explore BrainMass
Share

Determination of an offering price for an IPO (initial publi

If you were an investment banker, how would you determine the offering price of an IPO?

© BrainMass Inc. brainmass.com July 19, 2018, 7:58 am ad1c9bdddf

Solution Preview

The SEC procedures for the process of issuing new public stock offerings (IPOs) is highly regulated, complicated and date sensitive. For a definition of many of the terms involved in the process, refer to the following site:
http://personal.fidelity.com/products/stocksbonds/content/ipoglossary.html

The determination of the issue price is more of a marketing job. The underwriting firm(s) will float the issue by either agreeing to sell the stock on behalf of the company or by actually buying the stock for a negotiated price (usually discounted to the expected market price) from the company to resell to the public.

After the filing is approved by the SEC, ...

Solution Summary

In a 440 word solution, the procedure for pricing an IPO are detailed together with commentary about underpricing, regulations and marketing pressures

$2.19