ompanies that are owned by a group of investors, who could also be associated with the company's management, make initial public offerings. Such ompanies are referred to as nitial public offering perfo publicly owned corporations closely held corporations
ompanies that are owned by a group of investors, who could also be associated with the company's management, make initial public offerings. Such ompanies are referred to as nitial public offering perfo publicly owned corporations closely held corporations
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Type of corporation
Companies that are owned by a group of investors, who could also be associated with the company's management, make initial public offerings. Such
companies are referred to as
Initial public offering perfo publicly owned corporations
closely held corporations
When the demand for an initiar puvne uneny uru ur securlties exceeds the number of securities issued, the offering is deemed to be:
O Oversubscribed
O Undersubscribed
Indigo Inc. is going public and issuing 150,000 shares of common stock. The capital raised in the IPO will fund the company's proposed expansion. A
Dutch auction is used to allocate shares in the Indigo IPO. The following table shows the number of shares requested by potential investors in each
row.
Bids
Number of Shares Requested
Price per Share
Bidder # 1
50,000
$56
Bidder # 2
100,000
54
Bidder # 3
150,000
52
Bidder # 4
200,000
50
Bidder # 5
250,000
48
Bidder # 6
300,000
46
What should be the firm's IPO offer price?
O $48
O $54
O $55
O $52
O $57
O O o O o
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