_____ is also a method of issue of shares based on floor price which is indicated before the opening of the bidding process.*UnderwriterAdvertising a public issueIssue of bonus sharesBook buildingdistribution.
Question
_____ is also a method of issue of shares based on floor price which is indicated before the opening of the bidding process.*UnderwriterAdvertising a public issueIssue of bonus sharesBook buildingdistribution.
Solution
The method of issuing shares based on a floor price indicated before the opening of the bidding process is known as "Book Building".
Here's a step-by-step explanation:
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The company planning to issue shares determines a floor price or a price band for the shares. This is done with the help of underwriters.
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The price band, which includes a floor price (minimum price) and a cap price (maximum price), is disclosed to the public before the shares are offered.
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Potential investors are then invited to bid for the shares before the final price is determined. They can bid for the number of shares they want and the price they are willing to pay.
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The bids are collected during the bidding period. After the bidding process is closed, the final issue price is determined based on the bids received.
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The shares are then allocated to the bidders at the final issue price.
This method is called "Book Building" because during the process, a 'book' is built that includes the demand for the shares at different price levels.
Similar Questions
_____ is merely a conversion of existing reserves and surpluses into share capital. It does not result in raising fresh capital. It represents just a book entry subject to certain rules and regulations.*Book buildingdistribution.Issue of bonus sharesAdvertising a public issueUnderwriter
The issue of shares to identified investors is known as a: Group of answer choices a. non-for-profit issue. b. public issue. c. debt raising. d. private placement.
Which of the following is not a method of Underwriting? A. Private Placement B. Standing behind the issue C. Outright buying D. Consortium Buying
_____ is the person who buys shares in the expectation of selling them at a higher price.*Secondary marketPrimary marketPortfolio analysisBullBear
Select all that applyThe underwriting spread _______.Multiple select question.is an explicit commission paid by the purchasers of the securitiesis the difference between the price paid and the price received for the securitiesis usually larger per share for a larger security issuecan be divided among the different participants in the distribution process
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