When making an issue of shares to the public:

Question

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Setting the price at which shares will be issued to the public can be a difficult task as it requires considering various factors such as the company's financial performance, market conditions and investor demand. If the price is set too low, the issue may be oversubscribed but this is less common as investors may assume there is something wrong with the company or the share price is likely to drop further. Similarly, if the share price is set too high, investors may not be willing to buy the shares, resulting in an undersubscribed issue. Therefore, it is generally difficult to set the price at which the shares will be issued.

When Making an Issue of Shares to the Public