IPOs - INITIAL PUBLIC OFFERINGS(IPOs COMMON STOCK OFFERINGS...

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INITIAL PUBLIC OFFERINGS COMMON STOCK OFFERINGS ISSUED BY COMPANIES THAT HAD NOT PREVIOUSLY ISSUED COMMON STOCK TO THE PUBLIC UNDERWRITER DISCOUNT (GROSS SPREAD ) O PUBLIC OFFERING PRICE - PRICE PAID TO COMPANY
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UNDERWRITING IPOs INVOLVE A LARGE RISK OF CAPITAL LOSS FOR A SINGLE INVESTMENT BANK A GROUP OF FIRMS UNDERWRITE THE ISSUE TO SHARE RISK LEAD UNDERWRITER MANAGES THE DEAL (“RUNS THE BOOKS”) IF MORE THAN ONE INVESTMENT BANK MAY ACT AS LEAD UNDERWRITERS
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GOING PUBLIC SELECTION OF INVESTMENT BANK (UNDERWRITER) REGISTRATION OF IPO (PROSPECTUS – FORM 424B) WITH THE SEC (EDGAR) “ROAD SHOW” E PRESENTATION TO INSTITUTIONAL INVESTORS COMPANY AND INVESTMENT
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IPO SHARES MOST SHARES OF AN IPO ARE ALLOCATED TO LARGE INSTITUTIONAL INVESTORS INDIVIDUAL INVESTORS MIGHT GET SMALL ALLOCATIONS SHARES OF AN IPO
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UNDERPRICING IPOs ARE GENERALLY UNDERPRICED (OFFERING PRICE < FIRST DAY OPENING PRICE) REASONS: EASIER TO MARKET INVESTORS TEND TO OVERREACT UNDERWRITERS TAKE ADVANTAGE OF ISSUERS
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This note was uploaded on 04/11/2011 for the course ECON 3200 taught by Professor Azevedo during the Spring '11 term at UCM.

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IPOs - INITIAL PUBLIC OFFERINGS(IPOs COMMON STOCK OFFERINGS...

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