Initial public stock offerings provide a way to raise capital through
A)offering a partnership to someone with a lot of money to invest.
B)the unadvertised sale of stock to acquaintances and friends of the owner.
C)the merger of two different companies that agree to share ownership.
D)federally registered and underwritten sales of shares in the company.
E)the purchase of one company by another that is usually larger and better funded.

Question

Quizplus · Accepted Answer

Initial public stock offerings (IPOs) refer to federally registered and underwritten sales of shares in a company to the public for the first time. This process provides a way for companies to raise capital by offering ownership in the company to investors in exchange for funding. Option A refers to a partnership, which is not the same as an IPO. Option B describes a private placement, which is not open to the public. Option C describes a merger, which may or may not involve an IPO. Option E describes an acquisition, which is also unrelated to an IPO.

Initial Public Stock Offerings Provide a Way to Raise Capital