Select one of the following statements and give your interpretation of what is m

Question

Select one of the following statements and give your interpretation of what is meant. Do you think the statement is accurate? What conditions would make it more or less true?

a. “The recent wave of IPOs is an attempt by many small firms to capitalize on the recent run-up in stock prices.”

b. “IPOs transfer wealth from unsophisticated investors to large institutional investors who get in at the offer price and get out quickly.”

c. “Firms must be more accountable to the market when making decisions because they are subject to indirect control by institutional investors.”

d. "VC's desire for quick exit hurts the long-run growth of a developing company"

Explanation / Answer

The recent wave of IPOs is an attempt by many small firms to capitalize on the recent run-up in stock prices.

Some firms wait for the recovery in stock markets. As the markets started performing well they come up with their IPOs. When markets are performing well valuations are very high and investors are ready to put their money in stock markets. This way these small firms earn a very good premium for their stocks.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.