Question

Which of the following accurately describes an initial public offering (IPO)?

Answer 1

Answer:

Option B, The first sale of stock to the public, is the right answer.

Explanation:

A process through which a company offers its shares to the public in a new stock issuance is known as an initial public offering (IPO). The significance of an IPO is that a company can inflate its capital from public investors by selling its shares to the public.

The transition of a company from private to public can be an influential period for private investors to estimate gains from their investment because it covers share premiums for current investors. At the same time, it enables public investors to participate in IPOs.