COMMERCE 3FC3 Lecture Notes - Lecture 10: Greenshoe, Underwriting, Investment Banking

• School: McMaster University
• Department: Commerce
• Course: COMMERCE 3FC3
• Professor: Joy Zhang

Document Summary

Let"s say it"s a hot (popular, talked about) ipo. Investment bank will go through all of their contacts to ask who wants to order. These would be like large mutual funds and pension funds (multi-billion-dollar investment firms). Seo seasoned equity offer (or subsequent financing: already floating on the marketplace don"t need prospectus, still need to underprice by a little bit, seo when announced, stock price usually falls by approx. 3: reason for this is it sometimes sends a bad signal that this company is going out and raising equity, consider when does a company sell shares, people will think they"re fair or overvalued. This eventually became a hot ipo, people were ready to buy it. A couple days before ipo, prices started to increase for tickr symbol zoom (people were buying wrong company wrong spelling) Prices for this company started going up. 2 days later ipo was out and obviously prices went right down.