Describe three ways in which investment banks assist in an IPO?
Describe three ways in which investment banks assist in an IPO?
Homework Answers
Three ways in which investment banks assist in an IPO are
1. Underwriting :Securities Underwriting is a process through which
investment bankers purchase the securities like shares of corporate
during an IPO. and place it at the stock exchange for the first
time . They bear the risk of selling the securities and hence
charge fees to its clients.
2. Price Discovery: They help in achieving the price discovery of a
stock of a company. They organize road shows, perform calculation,
compare with similar companies in the industry, etc to arrive at a
price at which stocks can trade. Hence they aid in market making
during an IPO.
3. Regulatory Help: It helps in filing with the SEC(Securities and
Exchange Commission) and maintain all the documents are correct.It
helps in registering the company with the SEC for the IPO .
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