Initial public offerings (IPOs) are usually ________ relative to the levels at which their prices stabilize after they begin trading in the secondary market.

Question

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Studies have shown that IPOs are usually underpriced, which means the offer price is lower than the price at which the stock is expected to trade in the secondary market. This underpricing can range from a few percentage points to as much as 100%. The reason for this is that underpricing enables the company to attract more buyers and create more demand for its shares, thereby ensuring a successful IPO.

Initial Public Offerings (IPOs) Are Usually ________ Relative to the Levels