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Determination of an offering price for an IPO (initial publi

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

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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, ...

Solution Summary

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