Question

Which of the statements below is FALSE? Most companies have the resident expertise to complete an initial public offering (IPO) or first public equity issue. Selling of shares is the selling of ownership in the company. A company is said to go "public" when it opens up its ownership structure to the general public through the sale of common stock. Companies choose to sell stock to attract permanent financing through equity ownership of the company.

Answer 1

Answer:

Most companies have the resident expertise to complete an initial public offering (IPO) or first public equity issue.

Explanation:

When businesses need funding of their operations and growth they often exchange equity for funding from the public. For example when the retained earnings of a firm is not sufficient for its growth plans it can look to public funding through sale of shares.

An initial public offering (IPO) is done when a company gives out part of its ownership (equity) to the public in order to get funding.

Since IPOs occur only once in the lifetime of a company, most companies do not have a resident expert to complete an initial public offering (IPO) or first public equity issue.

Rather they employ a stock broker to arrange the IPO for the company.