This website uses cookies to ensure you have the best experience. Learn more

Initial Offerring Essay

1128 words - 5 pages

Initial Public Offering
All firms must have a source of funds to acquire assets and retire outstanding debt. One possible source for these funds includes savers who are not currently using all of their income to buy goods and services. The transfer of these funds may occur indirectly through a financial intermediary or directly through the purchase of securities issued by firms. The investment bankers act as a middleman between the firm and investors who underwrites the securities and guarantee the issuing firm a specified amount of money. The SEC also enforces the federal securities laws that govern the trading of corporate stocks and bonds in the secondary markets. The intent of SIPC is ...view middle of the document...

38." When the underwriting involves multiple brokerage firms, they come together to form a syndicate. A syndicate relieves the originating house from selling all of the securities. Instead, the syndicate comes together to portion out a specific number of securities to each firm. Syndicates come with the additional advantage of reaching more buyers that increase the likelihood that all of the issued securities sell (Mayo, 2012).
Pricing a New Issue
Most sales of new securities are underwriting, the pricing of securities is crucial. If the initial offer price is too high; the syndicate will be unable to sell the securities leaving the investment bankers to have only two choices. (1)Maintain the offer price and to hold the securities in inventory until they sale. (2)Allow the market find a lower price level that will induce investors to purchase the securities. The underwriters purchase the securities and hold them in inventory, and they either must tie up their funds, which could be earning a return elsewhere or must borrow funds to pay for the securities. The underwriters may choose to let the price of the securities fall, and the inventory of unsold securities can then sell at a lower price. They also cause the customers who bought the securities at the initial offer price to lose. The underwriters certainly do not want to inflict losses on the customer, so the investment bankers try not to overprice a new issue of securities (Mayo, 2012 pg. 39)
Risks in the Public Offering
Crossing state borders is not unusual for securities, so the primary regulation is at the federal level. These laws have been developed to protect the investor but in no way guarantee the investor will make money. They were first developed in the 1930’s as a result of the chaos in the market crash of 1929. “The 1933 act covers new issues of securities, and the 1934 act is devoted to trading in existing securities,” (Mayo, 2012 pg. 43). Since the acts would require administrative oversight, the Securities and Exchange Commission (SEC) was established.
Full-disclosure laws indicate that a firm that is publicly traded must keep the public informed on facts regarding the firm. In addition to filing reports during the year regarding material changes to the firm, the firm must file an annual report (the 10-K report) with the SEC. This information in the annual report to investors and is supplied free of charge. If the firm does not disclose such information...

Other Essays Like Initial Offerring

The French And Indian War: The "Real" First World War

1955 words - 8 pages supporting cast of Europe and the Caribbean in a manner of speaking. Borneman not only sets the stage early on, but goes out of his way to describe the very nature of the volatile world during the onset of the French and Indian War. He describes the various rulers listing King George II of Great Britain, Louis XV of France, Ferdinand VI of Spain, Maria Theresa of Austria, and Marquise de Pompadour mistress of Louis XV. Borneman describes the initial

Is The Use Of Animals In Medical Research A Necessary Measure?

1513 words - 7 pages Throughout history, animals have been used in experiments to test product safety and obtain medical knowledge that benefits both humans and animals alike. Every year there are numerous medical breakthroughs, such as medications and surgical instruments, which are tested on animals to insure their safety before they are deemed acceptable for human use. Even though the results of the experiments saved millions of human lives, they are also

Education And The Evolving Job Market

2363 words - 10 pages The lives of students today are changing. They are preparing for lives and jobs that have never before existed. If teachers hope to have a significant and worthwhile impact on these quickly changing lives, they must change the way they think, prepare, and instruct our future generations. Children cannot afford to have teachers who remain stagnant in their methods and ideals. Students crave instructors that are willing to allow them to tap

Young And Relentless

1737 words - 7 pages There are numerous influences that can be responsible of teenager’s behaviors and attitude as they develop. One factor that is important to these behaviors is parental figures being over involved or uninvolved in their children’s lives. Many of these effects include illegal substance abuse, rising sexual activity, underage alcohol consumption, and tobacco use. Studies show parental participation plays a key role in the characteristics developed

The Natural Law Theory

1231 words - 5 pages Obeying by the natural law theory is the only true and moral way to live life; especially a life lived in God’s image. God’s presence is a guiding factor to obtaining a moral and virtuous life, which can only be obtained by following the natural law theory. God created a set of laws as a supreme guide for humans to live life, like any law these laws were created to ensure wellbeing for everyone. The laws he created are the civil law, the natural

Resolved: Presidential Signing Statements Threaten To Undermine The Rule Of Law And The Separation Of Powers

1811 words - 8 pages The subject of signing statements has created much debate among the houses of Congress, government officials, and the public alike. These signing statements fall under the categories of constitutional and legislative history signing statements. Constitutional signing statements are those in which the president deems certain provisions of the legislation as unconstitutional, therefore they should not be enforced (Bradley & Posner, 2006

Oppressive Systems Of Government In Egypt And Animal Farm

1529 words - 7 pages As in Egypt, Orwell demonstrates through his allegorical novel “Animal Farm” that leaders are able to establish and maintain power over a people, and in turn create an oppressive and corrupt government system. Orwell shows the significant difference in the education and levels of knowledge in the animals, and how the government takes advantage of this difference. The split between the levels of intelligence is portrayed in the first chapter when

The Pathway To Psychosis

1415 words - 6 pages “How all occasions do inform against me” is a line from act IIII, scene IIII of William Shakespeare’s Hamlet. This line, spoken by Hamlet, expresses his emotional state as he is currently overwhelmed by the death of his father, the king of Denmark, and the situation surrounding it. After Hamlet learns of his father’s death he finds out that his mother has married Claudius, Hamlet’s uncle. On top of all of that, Hamlet soon after

Rated “M” For “More Censorship Not Needed”

1241 words - 5 pages Since the moment video games became a commercial success there have been people who have pushed for unfair amounts of censorship to be placed upon the content of the games and its availability to children. These groups push for increased regulations on content but there is already an appointed group to handle this issue, the ESRB. Even though there has been an increase in mature content in the video game industry, increased censorship is not

Four Components Of A Legally Astute Social Media Marketing Manager

1914 words - 8 pages With the advances in technology constantly changing companies have to find better ways to market their products to consumers. The explosion of Facebook has given companies a way to market products to consumers. Examine how a legally astute manager can use social media to his advantage. Review different forms of dispute resolution and determine which one works the best. What is the best course of action, the government can use to

Obama's Values

1217 words - 5 pages As individuals, we don’t tend to take action unless it’s for self-interest; however, in Dreams from My Father, Obama spends three years, after college, as a community organizer in Chicago. Obama goes through tribulations, disappointments, and even complete failures organizing meaningful events, decisive meetings, and humble gatherings but he keeps working toward achieving any possible change in the community. Even though results give him every

Related Papers

The Separation Of Capital Ownership And Control

1577 words - 7 pages The argument of whether the separation of capital ownership and control is an efficient form of organization has constantly been a controversial issue. The criticism whether the controllers’ act is in the best interest of the owners’ wills never end as long as hired managers operate management. As the number of public companies has been increasing over the course of this century, meanwhile the American style of contact based corporation has

The Versatility And Flexibility Of Oled's

1014 words - 5 pages In April 1, 2002, organic light emitting diodes gain rise in the scientific community with their published, more practical form at Ames Laboratory. “Scientists at the U.S. Department of Energy's Ames Laboratory, in collaboration with scientists at the University of Michigan, Ann Arbor, have developed and demonstrated a novel, fluorescence-based chemical sensor that is more compact, versatile and less expensive than existing technology of its

Comparing The Moral Virtues Of Antony And Julian The Apostate

1103 words - 5 pages Roman emperor Julian the Apostate and Christian leader Antony both exhibited many qualities of character during their existence. Both of them led very distinctive lives although shared several ethical values. Book 25 of “The Later Roman Empire” and the book “Early Christian Lives” show concrete evidence of this. In the following essay, I will argue how both leaders’ lives were devoted to their religious beliefs and their mutual cardinal virtues

Living In A Cashless Society Essay

1637 words - 7 pages Money in a traditional sense no longer exists. Money is becoming much of a concept than a physical material, and most ordinary bitter have not see the reality of the switch. People today are using credit and debit cards on a regular basis and in everyday situations such as meal purchased at fast food, highway tolls, clothing, groceries, gas stations, etc. all of these means of systems could be regarded as a cashless society or world. The question