The phenomenon where the price of newly-issued shares in the marketplace increases above the initial offering price is called ________________.

Question

Quizplus · Accepted Answer

Underpricing refers to the practice of setting the initial offering price of a stock below its market value, which often leads to an immediate increase in its price once it starts trading in the open market. This phenomenon is observed when newly-issued shares trade at higher prices than their initial offering prices.

The Phenomenon Where the Price of Newly-Issued Shares in the Marketplace