Corporate Finance Plus MyLab Finance with Pearson eText -- Access Card Package (4th Edition) (Berk, DeMarzo & Harford, The Corporate Finance Series)
4th Edition
ISBN: 9780134408897
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
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Textbook Question
Chapter 23, Problem 13P
What is IPO underpricing? If you decide to try to buy shares in every IPO, will you necessarily make money from the underpricing?
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Chapter 23 Solutions
Corporate Finance Plus MyLab Finance with Pearson eText -- Access Card Package (4th Edition) (Berk, DeMarzo & Harford, The Corporate Finance Series)
Ch. 23.1 - Prob. 1CCCh. 23.1 - Prob. 2CCCh. 23.2 - Prob. 1CCCh. 23.2 - Prob. 2CCCh. 23.3 - List and discuss four characteristics about IPOs...Ch. 23.3 - Prob. 2CCCh. 23.4 - Prob. 1CCCh. 23.4 - What is the average stock price reaction to an...Ch. 23 - Prob. 1PCh. 23 - What are the advantages and the disadvantages to a...
Ch. 23 - Prob. 3PCh. 23 - Suppose venture capital firm GSB partners raised...Ch. 23 - Prob. 5PCh. 23 - Prob. 6PCh. 23 - Prob. 7PCh. 23 - Prob. 8PCh. 23 - Prob. 9PCh. 23 - Prob. 10PCh. 23 - Prob. 11PCh. 23 - Prob. 12PCh. 23 - What is IPO underpricing? If you decide to try to...Ch. 23 - Prob. 14PCh. 23 - Prob. 15PCh. 23 - Prob. 16PCh. 23 - Prob. 17PCh. 23 - Prob. 18PCh. 23 - Prob. 19PCh. 23 - Prob. 20P
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- Many companies that go public with an IPO don’t actually need additional cashto continue growing their operations. Why might such a firm decide to go public?arrow_forwardWhich of the following is true regarding IPO pricing? Answers: Underpricing is more popular which hurts the firm Underpricing is more popular which hurts the investment bank Overpricing is more popular which hurts the firm Overpricing is more popular which hurts the investment bankarrow_forwardWhy might a company want to invest in a company rather than buy it outright? Wouldn't they have more say if they bought the company?arrow_forward
- What is the value of Ls stock for volatilities between 0.20 and 0.95? What incentives might the manager of L have if she understands this relationship? What might debtholders do in response?arrow_forwardCompanies sell common stock to raise long-term capital. What are the pros and cons of selling stock? Is it better to sell common or preferred stock? Why?arrow_forwardA firm is considering IPO, which is the best instrument they would use in terms of looking at investors available in the market and whyarrow_forward
- Which of the following is an advantage of a restricted-stock plan? A.The stock never becomes completely worthless. B.The plan creates new job opportunities in a company. C.The issuance of the stock increases the profit of a company. D.The creation of the plan increases the market price of the stock.arrow_forwardWhat are the advantages and disadvantages of higher dividends to investors?arrow_forwardDescribe what is IPO and what is involved in the IPO process. Do you think that it is better to buy shares in an IPO or shares in companies that are already listed on the stock exchanges? Why?arrow_forward
- . On the day an IPO comes out, the market pricecan rise above the offering price or fall below thatprice. Is it more common for the market price toclose above or below the offering price on the dayof an IPO? If a company’s market price rises abovethe IPO price, does that suggest that the companyleft money on the table and thus received less for its shares than it should have received? If mostcompanies do leave money on the table, does thatindicate the IPO market is inefficient? How mightsystematic underpricing be explained? Has theamount of underpricing been constant over time?Explain.arrow_forwardWhich of the following is true about IPO? A) Investment banks form underwriter syndicate.B) Road show is not necessary.C) Book buildings are only open to private equities.D) IPO bid winner will pay higher price than the true value of the stock.arrow_forwardWhy might a rational investor invest in the stock of a company that pays no dividend?arrow_forward
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