Unformatted text preview: 4. Yields on comparable bonds can usually be readily observed, so pricing a bond issue accurately ismuch less difficult. 5. It is clear that the stock was sold too cheaply, so Eyetech had reason to be unhappy. 6. No, but, in fairness, pricing the stock in such a situation is extremely difficult. 7. It’s an important factor. Only 6.5 million of the shares were underpriced. The other 32 million were, ineffect, priced completely correctly. 8. He could have done worse since his access to the oversubscribed and, presumably, underpriced issueswas restricted, while the bulk of his funds were allocated in stocks from the undersubscribed and, quitepossibly, overpriced issues. 9. a . The price will probably go up because IPOs are generally underpriced. This is especially true forsmaller issues, such as this one. b. It is probably safe to assume that they are having trouble moving the issue, and it is likely that theissue is not substantially underpriced...
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- Finance, investment bank, internally generated cash