how the price of a share is determined in ipo?
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Explanation:
You can determine the value of shares in an IPO by dividing the number of shares sold by the sum total of paid-in capital.
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The price of Initial public offer is determined by Book building method.
Explanation:
In this method the issuer company determines the number of shares and issue price at which shares will be sold by bidding process. the company issue Red heering prospectus which contains price range or price band for 1 share and ask investors to bid on it.investors can bid on number of shares they want to purchase within the price band. the bidding goes on for 5days. after the bidding is over company fixes “cut off price" based on the highest price or best price at which share on offer cab be sold.
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