Question

In: Finance

how easy is it for small investors to invest in an IPO?Why might this be the...

how easy is it for small investors to invest in an IPO?Why might this be the case?

Solutions

Expert Solution

ANS: IPO Stands for Initial Public offer in which shares of a private company are being offered to public in order to raise their capital from public investors. After IPO company's shares are traded in an open market, These shares can be further sold by investors in secondary market trading.

To participate in an IPO, an investor must register with the brokerage firm. It's easy and good for an investor to invest in an IPO as it present a convinent platform especially for new investors. It brings a good opportunity for them to make an entry to the market at feasible rates.

For an Investors going for IPO, following cases or points helps the investors to make IPO easy  -

  1. Keeping himself update about the economic scenario, industry, government plan & policies.
  2. Regularly keep a watch on stock exchange for raising & falling of sensex.
  3. Habit to go through the balancesheet of various companies
  4. Pick a company with strong brokers.
  5. Always read company's prospectus, memorandum & article of association.
  6. Be cautious & keep skeptic attitude.
  7. Check the background of promoters
  8. Monitor the performance of the company in which he is willing to invest.

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