Studies have shown that, on average, new security issues are:

Question

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Studies have shown that new security issues are on average underpriced, which means their initial trading price is lower than their true value. This is done to incentivize investors to purchase the security and to ensure a successful IPO. Once the security starts trading on the market, its price will often increase, known as the "pop," which benefits both the underwriters and the investors who got a bargain through the underpricing.

Studies Have Shown That, on Average, New Security Issues Are