The return to investors who purchase IPO shares at the IPO offer price are ____, and the returns to investors who purchase the shares after the IPO are generally ____.

Question

Quizplus · Accepted Answer

IPO shares are often underpriced to attract investors, which results in high returns for investors who purchase shares at the offer price. However, once the shares are trading in the secondary market, the price is determined by supply and demand, and the returns are generally lower for investors who purchase shares after the IPO. Therefore, the first statement is true, but the second statement is generally false, leading us to choice (B).

The Return to Investors Who Purchase IPO Shares at the IPO