Question

If an IPO is underpriced then:

Question 41 options:

	The issue is less likely to sell out.
	The stock price will generally decline on the first day of trading.
	The issuing firm "leaves money on the table".
	Investors in the IPO are generally unhappy with the underwriters.

Answer 1

41. Initial public offering underpricing is done when issuing firm leaves money on the table for the investors in the initial public offer.

Initial public offering underpricing will mean that the price at which the shares are offered into the market will be generally lower than the actual value of the share and when the shares are getting listed , person who have subscribed are having a chance of making the money on the first day of listing

All the other options are incorrect.

Correct answer will be option (C) The issuing firm leaves money on the table.