Initial public offering
from class: Principles of Finance Definition An Initial Public Offering (IPO) is the process through which a private company offers its shares to the public for the first time. This marks the transition of a company from private to public ownership.
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Predict what's on your test 5 Must Know Facts For Your Next Test IPOs are used by companies to raise capital from public investors. The IPO process involves several steps, including due diligence, regulatory filings, and setting the offer price. Investment banks often underwrite IPOs, meaning they help set the price and buy shares to sell them to the public. The first-day performance of an IPO can significantly impact investor perception and future stock performance. Historically, IPOs can be highly volatile and may not always perform well in the long term. Review Questions What is an Initial Public Offering (IPO) and why do companies pursue it? What role do investment banks play in the IPO process? Why might an IPO's first-day performance be significant? "Initial public offering" also found in:
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