What is IPO? & How does a company offer IPO?

IPO means Initial Public Offering. It is a process by which a privately held company becomes a publicly traded company by offering its shares to the public for the first time. A private company, that has a handful of shareholders, shares the ownership by going public by trading its shares. Through the IPO, the company gets its name listed on the stock exchange.

A company before it becomes public hires an investment bank to handle the IPO. The investment bank and the company work out the financial details of the IPO in the underwriting agreement. Later, along with the underwriting agreement, they file the registration statement with SEC. SEC scrutinizes the disclosed information and if found right, it allows a date to announce the IPO.

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Reality versus Fantacy

Reality 🆚 Fantacy If a friend with little farming experience told you that he planned to feed himself with food grown on a quarter-acre (1,000 square meters) plot, you’d expect him to go hungry. One can squeeze only so much from a small piece of land.There is, how- ever, a field in which grown-ups let their fantasies fly—in trading. A former employee told me that he planned to support himself trading a $6,000 account. When I tried to show him the futility of his plan, he quickly changed the topic. He was a bright analyst, but refused to see that his “intensive farming” plan was suicidal. In his desperate effort to succeed, he’d have to take on large positions—and the slightest wiggle of the market will quickly put him out of business. A successful trader is a realist. He knows his abilities and limitations. He sees what’s happening in the markets and knows how to react. He analyzes the markets without cutting corners, observes himself, and makes realistic plans. A professional tr...

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