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

Initial Public Offering Paper - Essay ExampleIn this case, up to now after the IPO, Del-Ta Engineering is still the controlling shareholder by virtue of its shareholders agreement with David Rivel (Initial Public Offerings (IPO) RRSAT Global Communications Network Ltd. n.d.).IPOs have positive initial returns on average. This is the phenomenon of underpricing (Ross, Westerfield, and Jaffee, 1996). For example, at start of the inaugural day after the RRSat Global Communications Network Ltd., the shares were 12.16% ($14.02 - $ 12.50)/$12.50 above their initial offering wrong. 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 portion (20.73%) of the price of stock. This can be explained by the time value of money. A dollar now is worth more than a dollar in the future.a. unfit companies. High-risk compani es are expected to distribute a relatively low proportion of current earnings and have a relatively low PE ratio. A defective company is likely to retain more of its earnings as the probability of bankruptcy is higher.