10-12-2004, 10:04 PM
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Die With Your Boots On
Join Date: Oct 2003
Location: Hawaii
Posts: 22,872
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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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That's the way it works.
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