Why does IPO underpricing exist?

Q: What is capital rationing?

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Q: How do convertibles reduce agency costs?

A: Agency costs: An agency cost is a kind of inside business cost which originates from the movements…

Q: How are common shares different from preferred shares? Cite advantages and disadvantages.

A: Share can be defined as unit of ownership in a company. Investors invests in a company by purchasing…

Q: What are some alternative ways of structuring takeover bids?

A: Takeover bids are the purchase offer that an acquirer given the target company either by offer cash…

Q: What are the difference between intrapreneurship and entrepreneurship

A: Entrepreneurship means the willingness of an individual to start a business and undertake the risk.…

Q: Describe about the primitive rights of shareholders?

A: Primitive rights of shareholders: Primitive rights are a contractual clause giving a shareholder the…

Q: Why do most acquisitions fail to create shareholder value?

A: Mergers and acquisitions generally failed to create or add value for the shareholders because of…

Q: What is an IPO?

A: Initial public offering refers to the offering which is done first time by any private corporation…

Q: What are the financial effects of firm acquisitions?

A: Corporations will acquire or merge with a different company in expectations of advancing the growth…

Q: What are the advantages of using restricted stock to compensateemployees?

A: Restricted stock are the shares of a company, which is issued to its employees, but not entirely…

Q: Why woulda company hedge?

A: Hedging is the method of trading in an asset to offset the risk arising due to the volatility of…

Q: What is oversubscribed (IPO)?

A: Introduction: Initial public offering (IPO) happens when a company is first selling shares to the…

Q: Why might purchasing power parity fail to hold?

A: It refers to the relationship which indicates the same cost and same kinds of products in the market…

Q: What is an initial public offering (IPO)?

A: Initial public offer is the first step of listing the common stocks of a company in the stock…

Q: What are Nike’s choices in accounting for the share repurchases?

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Q: Share option compensation is what accounting subject?

A: Stock-based compensation: It is a way of paying employees, executives, and directors of a company…

Q: what are some risks that private equities encounter when they're buying a company

A: One of the better performing asset groups has been private equity (or "PE"), in part because…

Q: What are holding companies? What are theiradvantages and disadvantages?

A: Holding companies: Holding company is a corporation that does not carried out any processes,…

Q: What are the advantages of bringing IPO  into company?  What are the advantages and disadvantages of…

A: 1.)- Advantage of transfer IPO into company-  Blessings and downsides of IPOs An initial public…

Q: What is private markets?

A: Private markets are generally platform for parties like venture capitalists, angel investors,…

Q: Write down what are the disadvantages of shareholders equity?

A: Equity is one of the common sources to raise finance. Whenever a company requires finance it can…

Q: what is IPO underpricing? How do asymmetric information model explain this phenomena?Briefly explain

A: When an IPO( initial public offering )  is set at a price lower than its real market value. So, when…

Q: EPS after the takeover?

A: EPS: EPS stands for Earning per Share. Earnings per share means the overall earning of a shareholder…

Q: Would companies going public use a negotiateddeal or a competitive bid?

A: A negotiated bid is a bid based upon negotiation with a chosen party, whereas competitive bidding is…

Q: What is the fair value option? Where do companies thatelect the fair value option report unrealized…

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Q: What is leveraged buyout (LBO)?

A: In the case of mergers and acquisition, when a company is being taken over, the acquiring company…

Q: What is the financial advantage (disadvantage) of accepting the outside supplier's offer?

A: Make or buy decision: It is the decision made by the company to manufacture the product or buy it…

Q: What is the cost of preferred equity?

A: Cost of preferred stock is the rate of return derived from the preference stock by the…

Q: what are the dividend constraints?

A: In the world of finance dividend constraints are a reality that companies and shareholders have to…

Q: What is purchasing power parity? Why might purchasing power parity fail to hold?

A: To measure the prices of goods in different countries purchasing parity is used. As per the…

Q: What are the functions of the underwriters in an IPO?

A: Initial Public Offering Initial public offering refers to the process by which a company sells its…

Q: What is initial public offering (IPO)?

A: Primary market is the market where the securities will be sold initially. Public buy the securities…

Q: Why would a company consider going public?What are some advantages and disadvantages?

A: The name Public Company itself gives a clear idea of what a public company means or stands for. A…

Q: What are the main costs associated with an initial public offering (IPO)?

A: Initial Public Offering Initial public offering refers to the process by which a company sells its…

Q: What are the risks in the corporation Equinix?

A: The ERM (Enterprise Risk Management) programme at an Equinix corporation is actually designed to…

Q: What is the relevance of Leveraged buyouts (LBOs) to Mergers, Acquisitions and Divestitures?

A: Mergers, Acquisitions and Divestitures generally require a large amount of funds to finance the…

Q: What are the direct and indirect costs of an IPO?

A: An initial public offering or IPO is the method of issuing the shares of the company to public for…

Q: What is the fair value option? Where do companies that elect the fair value option report unrealized…

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Q: How does the public good of accounting information lead to underproduction in a free market?

A: Accounting information is provided to the users in the form of annual Statement which includes…

Q: Why does market bubble occur?Discuss.

A: A market bubble occurs when the prices of a stock rise extremely high than its actual fair value. It…

Q: why a specific company would purchase the stock of another and provide an example

A: The stock values of the two companies typically move in predictable opposing directions after an…

Q: What is the fundamental difference in a general stock redemption vs. a Liquidating Distribution?…

A: Income tax is the payment required to be made to the authority which is charged to collect the…