Chapter 20, Problem 9CQ

Summary Introduction

To explain: The expectations of the investor from the offering and the reasons for that.

Bond:

Bond refers to the securities which are traded in the public to raise the capital when needed. It is an investment with a fixed income where an investor gives money to an entity or individual for a specified period of time at a fixed rate.

Initial Public Offering:

The initial public offering refers to the shares or the stock which is offered by a company to the public for the first time. This is done following lots of regulations and is generally done to raise the funds of a company.

Underpricing:

The underpricing term refers to the offering of the stocks or the bond at a low price than before. The stocks or the debt are said to be underpriced when they are traded at a lower price than on which it was issued first for trade.