When a private firm makes its equity available to the public in order to meet its need for equity capital,it undertakes a process known as:
A)a shelf registration.
B)an addition to retained earnings.
C)an initial public offering.
D)a secondary stock offering.

Question

Quizplus · Accepted Answer

When a private firm makes its equity available to the public, it does so through an initial public offering (IPO). This involves issuing new shares of stock to the public in order to raise capital. A shelf registration allows a company to register securities with the SEC and make them available to the public on an as-needed basis. However, an IPO is the specific process of offering shares to the public for the first time, so choice C is the correct answer. Retained earnings and secondary stock offerings are not relevant to the process of making equity available to the public.

When a Private Firm Makes Its Equity Available to the Public