SIE practice questioneasyInitial Public Offering
An initial public offering (IPO) is best described as:
- AThe repurchase of shares by a public company
- BThe sale of additional shares by a company that is already publicly traded
- CThe first time a company sells its shares to the public✓ Correct answer
- DA private placement of securities to accredited investors
Explanation
Why C — The first time a company sells its shares to the public
An IPO is the first time a company offers its shares for sale to the general public. Before an IPO, the company is privately held. After the IPO, its shares trade on a public exchange or OTC market. Choice A describes a follow-on (secondary) offering by an already-public company. Choice C describes a private placement (exempt from public registration). Choice D describes a stock buyback.
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