Question
Download Solution PDFWhat is ‘Issue Price’?
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFThe correct answer is It is a price lower than the market price.
Key Points
- The issue price is the price at which shares are offered for sale when they first become available to the public.
- It is a price lower than the market price.
- When the issuer at the outset decides the issue price and mentions it in the offer document, it is in the offer document, it is commonly known as a “Fixed price issue”
- When the price of an issue is discovered on the basis of demand raised from prospective investors at various investors at various price levels, it is called a ‘Book built issue’
Additional Information
- An initial public offering (IPO) refers to the process of offering shares of a private corporation to the public in a new stock issuance.
- Fixed Price Issues and Book Built Issues are two major types of IPO.
- All types of investors are required to bring in 100% of the application money as a margin along with the application for securities in Public Issues.
- This has been done to avoid inflated demand in Public Issues and to provide a level playing field to all investors subscribing to securities.
Last updated on Jun 6, 2025
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