What is an initial public offering?

Interesting Question?   (5)   (5)

Answers (1)

6th Dec 2009 by Amelia Timbers

An initial public offering, more commonly known as an IPO, is a firm's initial public sale of stock. When a company is in start-up mode, it finds financing either by self generated cash-flow, debt or borrowing, or equity. In order to offer equity, a firm must have an IPO. The firm submits to a valuation, determines the number and class of shares to be offered, and determines a price. The stock is listed on an exchange and sold. Pricing stock for an IPO is a tricky science. Sometimes the value of the stock will fall immediately after an IPO if the market feels it was overpriced; other times, the price notably increases if it was undervalued. The success of an IPO can affect the company's cost of equity, and then affecting the company's WACC.

Like This Answer?   (1)   (0)
This answer is the subjective opinion of the writer and not of

4th Dec 2009 In Stocks 1 Answers | 485 Views

Answer This Question / Give Your Opinion
What is an initial public offering?

Answer: *

What country is this answer relevent to? *
Your Name: *

Enter Verification Number: *

Give Your Opinion
When should you negotiate outstanding debt to creditors?
Share a simple answer to help inform others:
Specific to any country?
First name / Alias

• Your answer will be posted here:
When should you negotiate outstanding debt to creditors?
Ask A Question
Get opinions on what you want to know:
Specific to any country?