Pricing an Initial Public Offering
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Junk bonds garnered considerable public attention during the 1980s as some individuals gained significant wealth through investing in the bonds, but the market eventually fell into disfavor as scandal and corruption emerged. During the 1990s, the initial public offering (IPO) was responsible for making millionaires out of founders and employees of new companies, but the dot-com collapse in the early 2000s removed some of the luster from these investment vehicles, as well. This research considers the art of pricing an initial public offering, and whether IPOs are examples of market efficiency or whether the trend toward underpricing results in a less than optimal system.INITIAL PUBLIC OFFERINGS AND THE ROLE OF THE UNDERWRITER Private companies have private sources of funding and do not make public financial disclosures as a course of business. Such companies tend to remain relatively small (United Parcel Service was one of the largest privately-held companies until it went public several years ago) since investors' capital has limited liquidity. Companies that sell public shares, however, provide their inves
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Some common words found in the essay are:
Stock Exchange, EFFICIENCY Underwriters, CURSE According, INTRODUCTION Junk, Parcel Service, UNDERWRITER Private, October Initial, Administration Quarterly, initial investors, sell shares, canina 1996, initial public, REFERENCE Canina, winner's curse, market clearing, clearing price, public offering, market clearing price, initial buyer final, capital underwriter, sell shares initial, initial buyer, initial public offerings, buyers willing pay,
Approximate Word count = 766
Approximate Pages = 3 (250 words per page)
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