| When a company first comes to the market in its | | | | economists and accountants in order to strike the |
| initial public offering, it can generate a great deal | | | | best balance between the amount of money the |
| of interest from investors, making it an attractive | | | | business needs to raise, and its actual value, which |
| time to invest, but in general, the question of | | | | relates to its assets and profit forecasts. |
| whether it is safe to invest in a company at IPO | | | | Because the market does not set the price of an |
| will depend on the perception of its market value. | | | | IPO, it is a price that is subject to enormous |
| Typically, the IPO is the only time at which the | | | | fluctuations as soon as the shares go on sale. |
| share value of a business is fixed. A business has | | | | Depending on whether investors decide that a |
| to go through a number of steps prior to IPO to | | | | company is worth putting their money into or not |
| establish its long term security, and the launch | | | | will determine the direction that the share price |
| price of the stock will be determined by | | | | takes over the first few periods of trading. |