COMMERCE 3FA3 Lecture Notes - Lecture 3: Warren Buffett, Indirect Costs, Market Price
17 Oct 2017
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Lecture 4: notes missing beyond this point!!!!!!!!!!!!!!!!!! Market price exist base for issue price. Ipos were coming out like crazy before that because anything related to the internet was being values at excessive pricing. There was a belief that there was excessive underpricing. There was an overvaluation (pricing bubble) so normally we would value a company based on cash flows etc. But these new tech companies were coming up with random ways of valuing their companies. There was also a company back then called zoom. com ipo nasdag. People started thi(cid:374)ki(cid:374)g that (cid:454)oo(cid:373) (cid:449)as the (cid:374)e(cid:449) ipo. Costs of issuing securities: spread market price price paid by i bank, direct costs lawyers, filing, etc, indirect costs management time working on ipo. Investment banker can buy extra shares if the issue sells out. Eps decline as a result of a share issue. So if we say our ni is 1,000,000 and our os shares is .
