If you were an investment banker, how would you determine the offering price of an IPO?
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:
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, ...
In a 440 word solution, the procedure for pricing an IPO are detailed together with commentary about underpricing, regulations and marketing pressures