Initial public offerings (IPOs) are usually ___________ relative to the levels at which their prices stabilize after they begin

Question

3 years ago

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Initial public offerings (IPOs) are usually ___________ relative to the levels at which their prices stabilize after they begin

trading in the secondary market. a. overpriced b. correctly priced *c. underpriced d. mispriced, but without any particular bias

Social Studies

1 answer:

Talja [164] · Answer 1 · 2022-05-31T09:16:14+03:00

Answer:

a. overpriced

Explanation:

Initial public offerings (IPOs) consist of going public on large companies on the stock exchanges through shares representing a share of the company. When an investor buys a share, he or she becomes a minority shareholder in the company's ownership structure. Normally, when companies open their IPOs, there is a high expectation from economic agents, increasing the demand for them. Therefore, the price is usually higher than the market price. Over time, the price adjusts to normal.