When securities firms facilitate an IPO, they attempt to price the stock:
A) at a level that will enable institutional investors who invest in the IPO to earn reasonable returns.
B) high enough to satisfy the issuing firm.
C) at a level that will enable the securities firms to place the entire issue.
D) all of the above

Question

Quizplus · Accepted Answer

Securities firms attempt to price the stock at a level that satisfies all parties involved. By setting a reasonable price that enables institutional investors to earn reasonable returns, the securities firm attracts more buyers, ultimately fulfilling the issuing firm's expectations. Moreover, the securities firm aims to place the entire issue to meet their own profit objectives. Hence, all the choices are accurate to explain securities firms' pricing strategy for IPOs.

When Securities Firms Facilitate an IPO, They Attempt to Price