What is ‘Issue Price’?

Question

Question

This question was previously asked in

SSC GD Constable Previous Year Paper (Held on: 8th December 2021 Shift 2)

Answer 1

The correct answer is It is a price lower than the market price.

Key Points

The issue price is the price at which shares are offered for sale when they first become available to the public.
- It is a price lower than the market price.
When the issuer at the outset decides the issue price and mentions it in the offer document, it is in the offer document, it is commonly known as a “Fixed price issue”
When the price of an issue is discovered on the basis of demand raised from prospective investors at various investors at various price levels, it is called a ‘Book built issue’

Additional Information

An initial public offering (IPO) refers to the process of offering shares of a private corporation to the public in a new stock issuance.
Fixed Price Issues and Book Built Issues are two major types of IPO.
All types of investors are required to bring in 100% of the application money as a margin along with the application for securities in Public Issues.
This has been done to avoid inflated demand in Public Issues and to provide a level playing field to all investors subscribing to securities.