Hello all, Suppose that a firm needs to make IPO and it needs to be provided...

Hello all,

Suppose that a firm needs to make IPO and it needs to be provided with the service of securities origination only, how this service will be finalized from the investment bank's side? I mean if we view this as process, what would be the output to the firm? And is it possible for a firm to get assisted only with such a service, assuming it can handle the real sale of its securities.

Thanks in advance!

Solutions

Expert Solution

Once the firm plans to go for IPO, the process involves lots of activities mostly related to securities origination function and asset allocation.
Usually a FINRA registered and licensed Investment Bank, financial institution or Broker-Dealer performs this function for the firm. The services from the financial institution usually involve support function with respect to the trading of the securities through a facilitating or Broker-Dealer trading platform. The firm decides the total securities to be traded, initial offer price of the stock or security to be brought to IPO, and sets the conditions for allocation in terms of maximum allocation limit to a particular category of the Investor. The Broker-Dealer lists calls for the funds from the investors on an average price basis or bidding basis. On the day when the allocation is supposed to happen, each investor is allocated a specific proportion of securities based on the highest bid made. The Securities Broker communicates the allocation to the investors in advance before the securities could be listed or brought to stock exchange. Subsequent services of the securities trading and margin maintenance are provided by the Broker-Dealer, and serves as a custodian of the securities being traded.
Output to the firm will be the securities being brought to the public at the securities exchange, a continuous broker-Dealer and trading support to the investors of the firm, custody of the securities and administration of the records and transactions made by Investors in their respective trading accounts maintained with the Broker-Dealer.
As discussed, the firm also gets assisted in trading and custody support for the securities held by the Investors. Administration of the securities transactions occurring through frequent trading through Investor trading accounts, investment advisory and margin support are few other major services the Broker-Dealer provides to the firm and its Investors.

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

Hello, please answer all 3 questions, if possible! :) I will make sure to add 5...

Hello, please answer all 3 questions, if possible! :) I will make sure to add 5 star rating! 29. Which of the following commands may be used to display boot error messages? (Choose all that apply.) a. dmesg | less b. less /var/log/boot c. less /var/log/wtmp d. less /var/log/boot.log 31. Which of the following can be used to obtain detailed performance statistics regarding virtual memory usage? (Choose all that apply.) a. Files stored within the /proc directory. b. The iostat...

Suppose a company needs to decide whether to make or to buy a product. The product...

Suppose a company needs to decide whether to make or to buy a product. The product can be purchased from the market at a price of 19 TL per unit. Alternatively, it can be manufactured in-house, in which case a machine has to be purchased for 120,000 TL to produce the part. The variable (material and labor) costs will be 10 TL/unit. This product will be needed for the next 5 years, at which time, the machine can be solved...

Make a single concept map using ALL of the terms provided below: *The terms are not...

Make a single concept map using ALL of the terms provided below: *The terms are not in any particular order. carbohydrate enzyme active site substrate lactose gene glucose nucleotide protein galactose DNA activation energy amino acid monosaccharide disaccharide catalyst

Suppose you are the chief financial officer for a pencim making firm that needs a new...

Suppose you are the chief financial officer for a pencim making firm that needs a new machine. Discuss the basic steps that you must go through to make this happen and the decisions that must be made for each one.

ABC C.o just completed an IPO with an investment bank on a firm-commitment basis. The firm...

ABC C.o just completed an IPO with an investment bank on a firm-commitment basis. The firm issues 5 million shares of common stock, and the underwriting fees were $2.09 per share. The offering price was $30.00 per share. (a) What were the total proceeds from the common stock sale? Total Proceeds $ ______________-.

In 2004, Google launched its IPO via Dutch Auction. Different from traditional IPO processes(Firm commitment and...

In 2004, Google launched its IPO via Dutch Auction. Different from traditional IPO processes(Firm commitment and Best efforts), Dutch Auction allows every investor, including small investors, to submit her bids online for IPO shares. It does not involve the “road show” or book building from investment banks. Google’s IPO price was $85, and it opened at $100 at the first day of trading, reflecting a 17.6 percent underpricing. 83 percent of the IPOs issued between January and November 2004 experienced...

Horus has developed successfully and needs additional funding. An IPO seems to be a natural step...

Horus has developed successfully and needs additional funding. An IPO seems to be a natural step forward. After the bookbuilding phase, it is decided that 1,000,000 stocks would be sold in the IPO at a per-unit price of $10. You think that there is a 0.55 probability that the price will go up to $13 (underpricing) and 0.45 probability it will go down to 8 (overpricing) . You also know that there are two types of investor in the market...

Suppose a firm experiences an increase in technology. All else equal, will this allow the firm...

Suppose a firm experiences an increase in technology. All else equal, will this allow the firm to produce the same level of output at a lower cost? Explain.

6) Evidence on IPO underpricing is provided in several empirical studies, including a seminal paper by...

6) Evidence on IPO underpricing is provided in several empirical studies, including a seminal paper by Loughran and Ritter (2004). 7) On average, IPOs traded at a premium and one reason can be underpricing of IPO at the offer time. Briefly discuss whether this result is consistent with previous empirical studies (Loughran and Ritter (2004)about IPO traded at premium if they were underpriced at offer time.

Suppose there are two firms, A and B, that make a mess when they produce. Firm...

Suppose there are two firms, A and B, that make a mess when they produce. Firm A can clean up “mess” for $10/unit while firm B can only do it for $20/unit. Suppose further that firm A produces 100 units of mess per week while firm B produces 200 units of mess per week. The government decides that there should be no more than 150 units of mess produced per week. What would the total costs of cleanup be if...

Subjects