Question

If many investors quickly sell an IPO stock in the secondary market, there will be ____ on the stock's price.a. upward pressureb. downward pressurec. no additional pressured. e.all of the above

Answer 1

Answer:

b. downward pressure

Explanation:

Initial Public Offering is a market launch of shares of a company to be sold to institutional, retail investors.

IPOs are sold in Primary stock markets, where new new securities are created by companies & sold to public for the first time.

However, there are also secondary stock markets, where old previously launched securities are sold second handed-ly by investors.

If the stock is quickly sold in secondary market, more of its demand will be satisfied by secondary market.

This will reduce its demand in primary markets, so it will create downward pressure on the stock's price