Quote:
Originally posted by JakeR
the underwriting bank sets the price, as they are the ones issuing it to the public. Lets say Lehman Brothers wants to take company X public, they evaluate the company at around 32$/share, they pay company 28$/share, and then unload the stocks to the public. They acquire the shares at a discount because they are taking the risk of underwriting the stock.
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but how does the bank evaluate the money? what aspects of the company make the bank set that specific price?
can they value a stock at more than the company is worth in assets? (company is worth 500 000$, they releast 2.5 million $ of shares)