Why is underpricing not a great concern with bond offerings? Use the following information to answer the

Question:

Why is underpricing not a great concern with bond offerings?

Use the following information to answer the question. Zipcar, the car-sharing company, went public in April 2011. Assisted by the investment bank Goldman, Sachs & Co., Zipcar sold 9.68 million shares at $18 each, thereby raising a total of $174.24 million. By the end of the first day of trading, the stock had zipped to $28 per share, down from a high of $31.50. Based on the end-of-day numbers, Zipcar shares were apparently underpriced by about $10 each, meaning that the company missed out on an additional $96.8 million.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Fundamentals of Corporate Finance

ISBN: 978-1260153590

12th edition

Authors: Stephen M. Ross, Randolph W Westerfield, Robert R. Dockson, Bradford D Jordan

Question Posted: