What Does IPO Stand For?


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'IPO' stands for Initial Public Offering. It means the number of shares of the company sold to the common masses for the first time. Its aim is to raise capital for the company for carrying out the purposes of business. It refers to the first public issue of company shares.

The company which is throwing the shares into the market gives invitation to the issuer and enters a contract with the help of an underwriter, who later sells shares in public. The underwriters also approach the investors and sell them by which they also earn commission up to 8 per cent.

The IPO's also involve law firms like the Magic Circle of London and the White Shoe firms of New York. Investment banks are required to take many factors into consideration when pricing an IPO.

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