Question

In countries where stocks are publicly traded, IPOs are underpriced

in very few countries.

in less than half the countries.

in every country.

none of these options are true.

Answer 1

First option is correct/most appropriate i.e. in very few countries

Explanation: IPOs are mostly overpriced in most of the countries given the demand supply scenario. When IPO is issued, demand is significantly high as compared to supply which will drive the prices up and hence the IPO will be overpriced. Ideally a company would come up with an IPO when its both business and financial profile are good so that investors can see value and potential growth in the stock of the company. This will cause the demand to be significantly higher in most of the cases.