Series 79 practice questioneasyIPO Process
During the IPO book-building process, which of the following is the main objective?
- ASetting the firm’s post-IPO dividend policy
- BDetermining the final size of the underwriter’s fee
- CEnsuring all shares are sold to retail investors
- DAssessing investor demand to help price and allocate shares✓ Correct answer
Explanation
Why D — Assessing investor demand to help price and allocate shares
Book-building helps underwriters gauge demand and set a fair price and allocation. The trap is confusing book-building with fee negotiation or focusing only on retail allocation.
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