Initial Public Offering Paper Essay Example | Topics and Well Written Essays - 500 words

Initial prevalent Offering Paper - Essay ExampleIn this case, even after the IPO, Del-Ta Engineering is still the autocratic shareholder by virtue of its shareholders agreement with David Rivel (Initial Public Offerings (IPO) RRSAT Global Communications communicate Ltd. n.d.).IPOs have optimistic initial returns on average. This is the phenomenon of underpricing (Ross, Westerfield, and Jaffee, 1996). For example, at start of the first day after the RRSat Global Communications Network Ltd., the shares were 12.16% ($14.02 - $ 12.50)/$12.50 above their initial offering terms. At the end of the first day, the shares were 20.24% ($15.03 - $ 12.50)/$12.50 above their initial offering price (RRSat Global Communications Network Ltd. n.d.).The present value of the first three payments comprises a significant part (20.73%) of the price of stock. This can be explained by the time value of money. A dollar now is price more than a dollar in the future.a. High-risk companies. High-risk compa nies are expected to distribute a relatively low proportion of current earnings and have a relatively low PE ratio. A high-risk company is likely to retain more of its earnings as the probability of bankruptcy is higher.