Follow an IPO from offer price to public trading: test your skills
An initial public offering is a company’s first sale of shares to the public. Early trading can be volatile. Answer each question to see the explanation; your score appears at the end.
This test checks that you can
- Explain what an IPO is
- Know why early IPO trading is volatile
- Find the prospectus and risk factors
- Practice
1. An IPO is…
- Practice
2. Many individuals buy IPO shares at…
- Practice
3. A lock-up period restricts…
- Key idea
4. Which statement best explains "Offer price is not trading price"?
- Key idea
5. Which statement best explains "Little history, high uncertainty"?
- Key idea
6. Which statement best explains "Lock-ups end"?
- Action plan
7. In the action plan, which step comes first?
- Mistake to avoid
8. Which of these is a mistake this lesson warns against?
- Mistake to avoid
9. Which of these is a mistake this lesson warns against?
An IPO is priced at $18 and first trades at $27. What is the first-trade percentage gain over the offer price?
Show the answer
50%
($27 − $18) ÷ $18 = 0.5.
Search the SEC’s EDGAR database for any recent prospectus and read its first risk factor.
More tests in this bootcamp
- What is a stock? Understand ownership and risk
- Compare common and preferred shares
- Follow a stock trade from quote to exchange
- Measure company size with market capitalization
- Read dividend yield without mistaking it for a promise
- Decode the P/E ratio: price compared with profit
- Understand growth and value investing styles
- Follow an IPO from offer price to public trading
- Tell a stock split from share dilution
- Understand market rises, falls and recovery math
- Final exam: Stocks and the market